Check out the latest from the respected Economists of the National Association of Home Builders. Click the link at the end of the paragraph for a detailed report.

The Economic Contraction Is Losing Steam
The sharpest contraction in economic output (real GDP) during the current recession apparently occurred in the final quarter of last year when a massive financial market shock threatened to throw the U.S. and global economies into 1930s-like depressions. The “Great Recession” is hardly over, but the rate of decline is slowing and the light at the end of the tunnel is coming into view. (Click here for more)

The Labor Market Will Lag the Recovery in Economic Growth
The labor market has been taking it on the chin since last fall as businesses have unloaded tons of workers and clamped down hard on compensation rates. This has been a cruel but essential process that has helped restore business profitability, reduce unit labor costs and make inflation a non-issue for the foreseeable future. (Click here for more)

Destructive Deflation Is Not in the Cards
The Federal Reserve, the guardian of the purchasing power of the currency, historically has identified price stability as a key target for monetary policy. However, recent Federal Open Market Committee statements have sounded a deflation alarm, citing the risk that inflation could drop “below rates that best foster economic growth and price stability in the longer run.” (Click here for more)

Financial Markets Are Healing Slowly
Bernanke has repeatedly said that economic recovery cannot develop unless major repairs are made to the financial system. On May 5, he told the Joint Economic Committee that conditions in a number of financial markets had shown some recent improvement but that financial markets and financial institutions “remain under considerable stress.” (Click here for more)

Measures of Housing Affordability Improve Dramatically
The affordability of home buying has improved dramatically over the past three years, and key measures recently have attained record highs – including NAHB’s quarterly Housing Opportunity Index and the National Association of Realtors® monthly Housing Affordability Index. (Click here for more)

Surveys of Consumers and Builders Signal Revival of Home Buyer Demand
The stunning improvements in major measures of housing affordability, along with temporary federal and state tax incentives for first-time buyers and new-home buyers, have served to stabilize housing demand and to encourage the beginnings of recovery. This revival has occurred despite the persistence of extremely weak economic conditions and serious tightening of lending standards in major components of the home mortgage market. (Click here for more)

Recent Housing Production Pattern Is a Mixed Bag
The overall level of housing production is quite depressed and the recent pattern is quite a mixed bag, with some components showing stabilization and even hints of improvement while others are displaying sharp retrenchment. (Click here for more)

Tight AD&C Credit Conditions Will Sap Strength of Recovery in Housing Production
Historically high inventories of vacant new and existing homes on the market will put downward pressure on house prices and exert a drag on the recovery of housing starts for some time, even as the recovery of housing demand gains some upward momentum. Indeed, those inventories will continue to be fed by a foreclosure wave that has not yet crested. (Click here for more)

Check out the latest from the respected Economists of the National Association of Home Builders. Click the link at the end of the paragraph for a detailed report.

First-Quarter GDP Hammered by Temporary Collapse of Business Spending

Real gross domestic product (GDP) contracted at an annual rate of 6.1% in the first quarter of this year, according to the “advance” estimate released by the Commerce Department on April 29. This was a deeper decline than the prevailing consensus estimate – NAHB expected a 5.2% contraction – and was nearly as deep as the 6.3% decline in the final quarter of 2008. (Click here for more.)

Swine Flu ‘Pandemic’ Is Not a Major Economic Event

For a while, it looked like the outbreak of swine flu could have major negative implications for the U.S. and global economies, particularly when the authorities declared that the geographic scope of the disease had reached “pandemic” proportions. After all, a serious and uncontrollable flu would take a major toll on the labor force, working hours and productivity, as well as on certain industries here and abroad – including travel and hospitality services. (Click here for more.)

FOMC Holds Steady at April 29 Meeting

As expected, the Federal Reserve held monetary policy steady at the April 29 Federal Open Market Committee (FOMC) meeting. (Click here for more.)

Supply-Demand Balance Is Improving in New-Home Market

The massive cutbacks in single-family starts since early 2006, particularly in the for-sale component of the market, have resulted in substantial reductions in the overhang of new homes for sale from the highs of 2006 to 2007. The months’ supply is still on the high side – 10.7 in March – but that number is subject to substantial decline as sales move up from the record low posted at the beginning of this year. (Click here for more.)

Fed Chairman Expects Improvements in Housing and the Economy

Testifying before Congress’ Joint Economic Committee on May 5, Federal Reserve Chairman Ben Bernanke said recent data suggest that the pace of contraction in economic activity “may be slowing” and noted that the housing market “has shown some signs of bottoming.” (Click here for more.)

Check out the latest from the respected Economists of the National Association of Home Builders. Click the link at the end of the paragraph for a detailed report.

The Economic Free Fall Is Losing Momentum

The contraction in real gross domestic product (GDP) for the fourth quarter of 2008 now stands at an annualized rate of 6.3%, according to the “final” estimate released by the Commerce Department on March 26. This represents a major downshift from the third quarter of 0.5% and was the sharpest decline since the depths of the 1982 recession. (Click here for more.)

The Labor Market Will Absorb More Damage

Normal lead-lag relationships ensure that the labor market will continue to lose ground while GDP growth stabilizes and begins to post modest below-trend positive growth later this year. (Click here for more.)

Mortgage Rates Should Fall Somewhat Further

Today’s home mortgage market is essentially a fixed-rate world, as adjustable-rate loans have nearly exited the scene. Furthermore, Fannie Mae and Freddie Mac recently have been accounting for about 70% of the fixed-rate mortgage (FRM) market, with FHA/VA loans making up most of the rest. (Click here for more.)

Consumer Views of Home Buying Conditions Have Improved

Broad measures of consumer confidence by the Conference Board and consumer sentiment by the University of Michigan remained at or below their respective record lows in March – primarily because of the extremely weak labor market conditions prevailing at that time as well as a weak outlook among consumers for income over the next six months. (Click here for more.)

Home Sales May Have Stabilized

Sales of both new and existing homes perked up a bit in February from their respective record lows. Furthermore, more-timely survey measures produced by NAHB suggest that the demand for new homes is firming up on a seasonally adjusted basis. (Click here for more.)

The Recovery in Housing Production Is Coming into View

The recent data on home buyer demand described above have bolstered our view that new-home sales bottomed out in the first quarter. Our short-term sales forecast depicts a gradual recovery process that begins in the second quarter and gathers momentum through 2010. (Click here for more.)

The Early Stages of Economic and Housing Recovery Will Be Relatively Gradual

Under ordinary conditions, the economy would be expected to rebound at a quick pace as major cyclical drags lift and forceful policy actions give a strong push forward.

However, the coming economic expansion figures to be less robust than usual, due to two structural “headwinds” – tighter credit conditions with less financial leveraging in national and global systems; and less aggressive consumer spending as heavily damaged household net worth and reduced prospects for capital gains encourage more saving out of current income. (Click here for more.)