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(To read more on the multifamily market, click here.)

ORLANDO-Striving hard to remain positive, David Seiders, chief, economist, National Association of Home Builders, predicts sales of new housing in the multifamily and single-family sectors are on their way up after hitting bottom at the end of 2006.

“Housing starts in 2007 will continue down for the first half of the year and then turn up for the last half,” Seiders predicted Friday at the four-day International Builders Show. The Orange County Convention Center event, the largest in its 24-year history, has drawn 105,000 industry professionals from 90 countries to the non-public attraction which has focused on the growth of green building concepts.

Seiders cushioned his forecast by saying that even though he expects a mild turnaround in home sales this year, he is not looking for the market “to get back to where we were in 2004 and 2005 for a couple of years.” The reason: the industry has overbuilt by about 400,000 homes over the last several years.

Although Seiders was largely bullish on the market, three other economists at the show were not. “We will see a much bigger drop in investor demand this year,” predicted David Berson, vice president and chief economist, Fannie Mae. “Starts are down and it will be awhile before they improve… .We are not at the bottom of the housing cycle yet.” Berson attributes a large part of housing sales slump to “an inventory overhang…that is causing builders to lower the prices of their homes.” He thinks “core housing demand will probably be negative again this year.”

Frank Nothaft, chief economist, Freddie Mac, agreed with Berson. “We are not at the trough yet,” Nothaft said. Affordable housing sales are still declining. “Some markets are holding up well…because housing is local, local, local by nature,” he said. The apartment rental market is “doing quite well…holding up over the last few years.”

Seiders, Berson and Nothaft spoke as a panel moderated by Seiders. In a separate presentation, Edward Sullivan, chief economist, Portland Cement Association, said that although “the distress in housing markets is not shared evenly,” he expects another down year for sales in 2007. “Despite recent news offering hope that the worst is over, declines in mortgage applications for home purchase suggest that the slump in residential construction may extend through this year.”

Sullivan predicted “the ongoing correction in residential construction is not likely to end soon and will exert an overall drag on 2007 cement consumption.” He said the housing weakness is not being felt nationally. “The conditions that are causing the decline in housing vary from region to region in degree and magnitude,” he pointed out.

“The real threat to the economy in the year ahead is not job losses resulting from a mild construction contraction, but instead, payback from how many homeowners financed the boom,” Sullivan explained. “The pressures of this phenomenon will build in the next two years” as “a large portion of these loans were scheduled for late 2006.” He said even more are scheduled for 2007 and 2008. “To the extent that issues relating to past home financing leak through, consumer spending will be dictated by the strength of the job market and increases in mortgage rates, and hence reset.”

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