NAHB Economist Predicts Home Prices Will Help Spur Demand

Orlando, Fla.– Economists cautioned Wednesday at the International Builders’ Show in Orlando, Fla., that the nationwide drop in residential building would continue through early 2009–but said that lower home prices would help correct the current U.S. housing decline, the Orlando Sentinel reports.National Association of Home Builders chief economist David Seiders told members of the media attending the conference that single-family home starts could decline another 27 percent in 2008. Although Seiders said lower home prices can cause money crunch fears and threaten consumer spending, he called the home price decline “part of the solution.”Seiders said the reduced prices would spur sales and increase demand for new homes–and for residential building.Frank Nothaft, chief economist for Freddie Mac, said that both the recent Federal Reserve interest rate cuts and economic stimulus plan payouts take time to make an effect on the economy, and the rebates won’t boost the economy until at least the third quarter. Nothaft also said that mortgage rates’ recent drop below 6 percent will help home buyers with cash reserves and good credit make home purchases–another positive sign for the industry.