MBA sees long road to housing recovery

The Mortgage Bankers Association is predicting that 2009 will be another rocky year for the housing sector, with housing starts falling 22.9%, new-home sales declining 31% and new-home prices falling another 5.1%. And the Washington-based MBA’s chief economist, Jay Brinkmann, expects it will take at least nine quarters after gross domestic product turns positive for housing to rebound. “We see a continued decline in overall housing starts, primarily driven by single family homes,” he said during a conference call Monday. Job losses and inventory gluts in certain areas, such as California, Florida, Arizona and Nevada, will delay the sector’s rebound. “It’s going to take awhile to work through that excess inventory,” he said. Mr. Brinkmann expects sales of existing homes to rise 1%, as low interest rates and falling home prices improve sales slightly in certain parts of the country. However, sales of new homes will fall 31% in 2009. He sees prices of existing homes tumbling 3.5% on average while prices of new homes will fall 5.1%. Part of the price decline in the new-home market is due to builders making smaller, more affordable homes in today’s weak economic environment, Mr. Brinkmann said. The MBA economist predicts the 30-year fixed rate on mortgages will average 5.1% in 2009, down from 6% in 2008, and he sees a 9.3% increase in mortgage originations this year. Even if GDP grows in the second half of 2009, as many economists are predicting, it likely won’t translate into a housing rebound until much later. “The recovery in jobs lags the recovery in the economy, and recovery in the housing market lags recovery in the jobs market,” he said. During the conference call, the MBA unveiled a white paper outlining ways it believes the government could stabilize the housing and mortgage markets.