The National Association Home Builders (NAHB)
In its December housing forecast teleconference, NAHB's chief economist predicted that new home sales will bottom out in the first quarter of 2008, while new home starts will reach their low point during the second quarter. Housing will again reach positive growth in the second half of this year. In 2009, housing should see "pretty good expansion," somewhere in the vicinity of 6.5% growth, according to NAHB. The economist tempered his prediction by stressing that the Federal Reserve must enact further interest rate cuts and continue assisting credit markets, while Congress must pass meaningful reform for FHA, as well as Freddie and Fannie Mac.

Homebuilding Executives
Homebuilders themselves are less optimistic. At a recent housing conference, D.R. Horton Inc. CEO Donald Tomnitz summed it up for homebuilders: " '08 is going to be worse than '07 for us and for the industry in general."

Echoing that sentiment, KB Homes Chief Jeff Mezger earlier this month commented that he believes "2008 will be another tough year for the homebuilding industry."

Likewise, Luxury homebuilder Toll Brothers predicted that 2008 revenue would be below Fiscal 2007 figures, which chairman and CEO Robert I. Toll called the "the most challenging of the forty years that Toll Brothers has been in business." In a highly unusual move, the company even declined to provide guidance figures for the coming year.

However, when commenting on the glut of homes currently on the market and the industry in general, Toll added a ray of hope: "It's not a matter of if, but a matter of when, this oversupply is absorbed. Then we shall return to better times."

Nevertheless, some analysts are predicting that several weaker players in the industry will file bankruptcy in 2008.

McGraw-Hill Construction
The publication expects overall construction starts to decline 2 percent in 2008. Single-family housing starts will fall 3 percent, while multifamily is forecast to decline 8 percent to $56.4 billion. The only positive growth for construction in 2008, the magazine says, will be in public works (+3%), public-private partnerships (+5%), and the institutional sector (+4%), mainly in the area of new school construction.

Fitch Ratings
In its primary forecast scenario, the global credit rating agency declared that the housing slump would continue through 2008, with overall housing starts declining 13.9 percent to 1.18 million (based on its prediction of 1.37 million starts in 2007), with single family starts falling 15.1 percent to 900,000. According to Fitch, new home sales will fall 5 percent to 700,000, with existing homes sales declining 8 percent to 5.2 million.

The ratings agency warned, however, that if credit terms tightened further or the economy sinks into a recession, a housing turnaround will not occur until 2009 at the earliest.

Deere & Company
The construction equipment maker is forecasting U.S. housing starts will fall to 1.1 million in 2008. The nonresidential construction sector will remain the bright spot—but will hover around its current volume.

Portland Cement Association
The Portland Cement Association, a leading trade organization for cement companies in the United States and Canada, believes the housing slump will last into mid-2009. The association forecasts a 2.5 percent decline in cement consumption for 2008, but does not foresee the economy slipping into a recession.

Turnaround Management Association
In its annual survey of approximately 8,000 corporate turnaround professionals, this Chicago-based association says that the housing crisis will continue through 2008. In fact, the majority of poll respondents agreed that "homebuilders will face the "greatest financial and/or operational difficulties" of all industries in 2008.

Long Term Prospects Remain Good
Despite the generally bearish outlook for the short-term, long-term prospects for the housing industry remain positive. A report from Harvard University's Joint Center for Housing Studies says that demand from new households will help fuel a market rebound. It estimates the country will need "sustainable demand" of 1.95 million units per year through 2014 to house all of those new families.

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