Despite the steadily weakening economy and the additional strain on consumer confidence caused by the September 11 attacks on America, the housing industry will rebound in 2002 and the number of housing starts will rise to 1.68 million units in 2003, according to predictions made in a report released by the National Association of Home Builders (NAHB).
In the report, “Housing and the Economy in the Aftermath of the September 11 Attacks on America,” author David F. Seiders, chief economist for the NAHB, points out the U.S. economy faces a recession that could result in an unemployment rate of 5.7% by the second quarter of next year. However, the association predicts the economic downturn will be short-lived.
A poll conducted by the NAHB September 19-20 found that although traffic of prospective buyers of new homes dropped by 10% to 20% shortly after the attacks, the rate of cancellations on previous sales contracts had not spiked.
The current construction market is weakening, but the NAHB remains confident. According to Seiders, if there are no new major attacks on the United States, if the military campaign against terrorism has some success, and if the public stands behind the Bush administration’s anti-terrorism plan, consumer confidence should rise by the third quarter of 2002.
In particular, Seiders points to several steps taken by the federal government since the attacks that he believes increase the country’s chances of emerging from the current economic downturn with few battle scars. Moves like Congress’ authorization of $40 billion in new federal spending for disaster recovery, $18.4 billion in defense appropriations for fiscal year 2002, and the Federal Reserve’s interest rate cut on October 2, could help bolster the economy, according to the association.
“It must be recognized that we are in uncharted waters, and current forecasts for the economy and housing have unusually wide ‘confidence’ bands around them,” Seiders states in the report. “Barring any additional disasters, the resilience of the U.S. economy, aided by our policymakers, should carry us through.”
For information on the report, visit www.nahb.com.