The National Association of Home Builders Chief Economist, David Seiders, reports that the while the housing downturn has been underway roughly two years, most indicators point toward further deterioration in 2007, with only a slight improvement in 2008.

In his monthly report, Seiders notes that a nationwide survey of more than 400 single-family builders, conducted by NAHB in June, suggests that annualized sales contractions will abate, from 15.8 percent in the first quarter to 4.3 percent in the fourth quarter. "We're looking for positive quarter-to-quarter growth throughout 2008, but the year-to-year gain is less than 1 percent," he says.

The outlook of residential fixed investment is "a whopping 13.9 percent" contraction. The NAHB's single-family Housing Market Index hit a current-cycle low of 28 in June, down from a high of 72 in mid-2005. The HMI was down by more than 50 percent in all four regions of the country, and all three component measures (current and expected sales as well as traffic of prospective buyers) had values less than half their 2005 peaks. When the index is below 50 percent, the outlook is negative.

He calls the housing correction to date "stunning," as the single-family market copes with two major imbalances -- historically low affordability and record high inventories of vacant homes, both new and existing.

The NAHB survey asked builders to rate housing market conditions in June, as compared to the recent past. Thirty-nine percent of respondents said that market conditions were stabilizing, while 43 percent said things were still declining. Only 9 percent said the markets were improving. The rest were not sure, reports Seiders.

Despite the grey outlook, not all builders are slowing production. Two-fifths of the builders in the June survey said they plan to start about the same number of units in the second half of this year as in the first half. But 36 percent said they plan to start fewer units in the second half. Only 23 percent said they plan to increase production. NAHB's current forecast for the second half of 2007 shows a 4 percent decline from the first-half pace, with single-family starts bottoming out in the fourth quarter at an annual rate of 1.1 million units.

Seiders predicts that single-family starts will decline 23 percent in 2007, followed by a 2 percent recovery in 2008. Multifamily starts will decline 16 percent in 2007 and another 2 percent in 2008. While manufactured home shipments are predicted to decline 19 percent in 2007, they'll catch wind in 2008 with a 10 percent recovery.

With the Gross Domestic Product held to 0.7 percent for the first quarter, and growing only about 3 percent the second quarter, Seiders predicts a 20 to 25 percent chance of recession by 2008.

Published: July 11, 2007

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Blanche Evans is the award-winning senior editor of Realty Times, the Internet's leading independent real estate news service. She is featured daily on the Realty Times Video Network in the "Realty Viewpoint" segment. Blanche has been named one of the "25 Most Influential People In Real Estate" by REALTOR Magazine, and has been twice recognized as a "notable." In 2005, she was named "Top Reporter Covering the NAR" by Delahaye-Bacon's. Blanche is a renowned author of five real estate books. Her newest, Bubbles, Booms and Busts: Make Money In Any Real Estate Market, McGraw-Hill, was rave-reviewed by The New York Times. She was also selected from hundreds of real estate experts to contribute to Donald Trump's book, Trump: The Best Real Estate Advice I Ever Received: 100 Top Experts Share Their Strategies, Rutledge Hill Press, and is featured on page 68. Order Now Review - Honors In 2006, Blanche was selected among scores of candidates to author two consumer real estate guidebooks for the National Association of Realtors: The NAR Guide to Home Buying, and The NAR Guide to Home Selling, Wiley & Sons. She is currently planning two new books for the NAR and its members.       Known for her keen insight into real estate industry issues and for her ability to make complex subjects easy to understand, Blanche is a sought-after keynote and continuing education speaker. Real estate organizations from MLSs, to brokerages, to franchisors, to associations hire her to provide up-to-the-minute analysis of real estate industry news and advice on how to improve revenues. Her passionate delivery, peppered with stinging wit, is a huge hit with audiences and fans. Don Klein, CEO Greater Nashville Association of Realtors, Blanche Evans, Richard Courtney, president 2007, GRAR "The GNAR membership meeting last week featured Blanche Evans as the keynote speaker. Her comments and insights resonated extremely well with those in attendance and we have had many requests for copies of her PowerPoint Presentation. She was a terrific part of the membership meeting and convention program!" - Don Klein, CEO Greater Nashville Association of Realtors Coverage from WSMV, Nashville - 8-14-2007 2007 AE Institute Session - To purchase 2006 AE Institute Session - Parts 1 2 3 4 5 6 7 8 9 HouseValues Mastermind call - Parts 1 2 Blanche's fireside chat with Jeremy Conaway, HAR - Click here. To contact Blanche, email her at . For more articles by Blanche, click here.