by Calculated Risk on 3/04/2008 04:08:00 PM

From MarketWatch: Rapid deterioration

Housing is in its "deepest, most rapid downswing since the Great Depression," the chief economist for the National Association of Home Builders said Wednesday, and the downward momentum on housing prices appears to be accelerating.

The NAHB's latest forecast calls for new-home sales to drop 22% this year, bringing sales 55% under the peak reached in late 2005. Housing starts are predicted to tumble 31% in 2008, putting starts 60% off their high of three years ago.

"More and more of the country is now involved in the contraction, where six months ago it was not as widespread," said David Seiders, the NAHB's chief economist, on a conference call with reporters. "Housing is in a major contraction mode and will be another major, heavy weight on the economy in the first quarter."
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Vacant homes for sale in the U.S. now number about 2 million, Seiders said, an increase of 800,000 from 2005.

There were 774 thousand new homes sold in 2007, so a 22% decline would be about 600 thousand in 2008. Last month there were 588 thousand new homes sold SAAR (seasonally adjusted annual rate). So Seiders thinks sales are near the bottom.

There were 1.35 million starts in 2007 (including apartment, condos, and owner built units), and a 31% decline would be about 934 thousand in 2008. Last month there were 1,012 thousand starts SAAR - so Seiders sees a further decline in starts.