It's when people view these changes as enduring that it really can affect their current spending behavior. I think that is happening probably, and I'm hoping that house price appreciation, the equity accumulation, will help soften the blow in consumer spending. |
My overall assessment of the housing sector is that we probably fundamentally topped out in the third quarter of 2005 in terms of home sales and housing production. |
Now what happens to the market depends on the interest rate structure. Long rates have been better than expected, but I think we can see them rising, moving into alignment with what's going on with the economy and with short-term rates. |
Our forecasts show 6 percent to 7 percent declines in home sales and single-family housing starts in 2006, followed by smaller declines in 2007. |
Some softening of long-term interest rates since early December helped buoy builder attitudes. Consumer confidence has rebounded nicely from post-Katrina lows. |
The big builders are marking down their outlooks for 2006 and rolling out some sales incentives -- the sort of things we see when the market starts to weaken on the demand side. |
The big risk is: How many investor-owned units are there? How many hidden units will come back into the market? |
The home-ownership rate has edged down a bit from its high in early 2004, and we're seeing more people moving into rental housing. |
The housing market is seeking out a peak. While it is still too early to conclude that it has found one, there is growing evidence that the Fed has started to hit its mark and housing will begin losing some of its exuberance in the period ahead. |
The hurricanes did cause some dramatic problems short-term, and there are some lingering ones. |
The key reason the market is losing momentum is a major decline in housing affordability measures as prices continue to move up aggressively in many, many markets around the country. There are reasons for the builders to be doing things to bolster demand, hold buyers in and limit cancellations, and I think that's what's going on out there. |
The numbers continue to look great. We're riding at an incredibly high level here. |
The recent stabilization is consistent with the orderly cooling-down process that NAHB has been forecasting. |
The retreat in housing-market activity that's now under way amounts to a simmering-down process from unsustainable market conditions in 2005, rather than a classic cyclical contraction that could spiral down for some time. |
The warmest winter weather on record is what is driving a lot of this. I think that is the key factor behind this very strong surge in housing market activity, and as we move forward I think we're going to see these numbers come back down a lot. |