National Association of Home Builders (NAHB) CEO Jerry Howard Tuesday in a conference call with reporters called on the federal government to save housing and the U.S. economy.
NAHB chief economist Dave Seiders provided the data and ammunition for Howard's pleas for assistance, which included a tax credit for buyers of new homes.
"It's probably obvious to everybody that we're in the midst of a rather dramatic downswing, and it looks like it's going to turn out to be the deepest downswing, the most rapid downswing, since the great depression," Seiders said.
"Housing is the weakest component of the economy," he continued. "It is pushing the overall economy to the brink of recession if not into it at this point."
Yet, hope persists. Seiders said recent indications from the Reuters/University of Michigan Consumer Sentiment Survey shows consumer thinking improving in January and February, and surveys of prospective buyer traffic from NAHB membership show more people coming to look at homes.
"It looks like interest is developing, and that people are at least out kicking the tires," Seiders said. "Obviously there is still a lot of reluctance to go ahead with the purchase, or we'd see it in the sales numbers. But this is a situation that I think is poised, if we can get a home buyer tax credit, a short window of opportunity, that you probably could move a bunch of leaners into the market and try to whittle down some of this excess inventory that is putting downward pressure on prices."
"I am counting on demand stabilizing in terms of sales activity by mid-year. At the moment the only signals I have in that direction are the highly tentative signals from Michigan and my own surveys," Seiders said.
Seiders also believes that the economy will not tip into recession, that home sales will stabilize in the second quarter of 2008 and start improving immediately, and that home starts will bottom in the third quarter and start improving in the final quarter of the year.
"It really is critical for the overall economy that housing form this kind of a pattern because the temporary economic stimulus act that was passed recently, the support to the economy in there for consumer spending and business fixed investment primarily, will go away by the end of this year," Seiders said. "If housing is not showing some improvement growth, by the early part of 2009, the economy could be set up for another major setback."
Howard wants reform to the regulatory bodies that govern Fannie Mae and Freddie Mac, government-sponsored entities that buy and guarantee mortgages. He wants them to be given permission to be more aggressive, noting that the "prevailing mood in the leadership of those corporations is to pay attention to their safety and soundness mission at the complete and total risk and avoidance of their housing mission," Howard said.
If legislation were passed, "They'd be able to be a little more aggressive in their decision-making processes and pay more attention to the housing component of their mission, which, after all, is why they were created," he said.
Howard, upset that the "Hill" is not listening or talking seriously about housing, did not hold back from throwing a barb or two at the federal government.
"Some of the actions policy makers could take now are actions that they could've taken several years ago, and if they had, we may not be in as deep a soup as we find ourselves in," he said.
Howard also wants reform for the Federal Housing Administration, tax breaks for small businesses, mortgage revenue bond programs at the state levels to remove the caveat that allows use for only first-time buyers to enable more refinancing, and among yet other things, a tax credit for buyers of new homes.
To view the slides from Seiders' most recent housing and economic forecast, visit: http://www.nahb.org.