MBA expects economic growth in the second half of 2008 to be negative and will remain negative through the first half of 2009, it says in its latest economic forecast. A modest recovery will begin mid-next year; by year end 2009, growth will be picking up. MBA did not return a call to GlobeSt.com in time for publication. The association also reports that total residential mortgage production in 2009 is projected to be $1.67 trillion, down from an expected $1.86 trillion in 2008 and $2.3 trillion in 2007.

While the numbers are slightly more optimistic than other projections--some of which expect bad times to continue until 2010--MBA is using the "R" word. "A recession appears to be underway, as evidenced in rising unemployment, contracting manufacturing activity and declining inflation-adjusted consumption spending," Jay Brinkmann, MBA chief economist and senior vice president for research and economics, says in a prepared statement. "Credit markets continue to be dysfunctional and the recent intensification of the credit crunch is hitting an already weakened economy. We expect residential investment to decline further through the first half of 2009, due to the excess supply of houses and weakened demand from the recession." By the end of next year, the unemployment rate will probably be around 7.7% and remain elevated through most of 2010 before heading down again, he adds. MBA estimates that real GDP growth will average about 0.3% in 2008, 0.1% in 2009 and 3.4% in 2010.