NAHB Chief Economist David Seiders interviewed by the Nightly Business Report during last week's forecast conference. (Photo by Morris Semiatin)

Housing Poised to Recede From Peak Levels

Frustrated that steadily increasing the federal funds rate in quarter-percentage-point increments hasn’t driven up the low long-term mortgage rates that have helped fire up the housing market in recent years, the Federal Reserve will continue tightening into early 2006, when housing activity should start flattening out below this year’s torrid levels, according to economists at the NAHB Construction Forecast Conference in Washington, D.C. on Oct. 19.

“The housing market is seeking out a peak,” said NAHB Chief Economist David Seiders, and while it is still too early to conclude that it has found one — with housing starts increasing 3.4% in September and third-quarter performance exceeding expectations — there is growing evidence that the Fed has started to hit its mark and housing will begin losing some of its exuberance in the period ahead. ...

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Remodeling Activity Continues Trending Upward

For years housing analysts have been predicting that the day was nearing when the nation’s volume of remodeling activity would surpass new construction, but home building has been doing so well in recent years that the gap for remodelers has actually widened instead of narrowing even as business has proceeded at a healthy clip, Kermit Baker, senior research fellow at Harvard University’s Joint Center for Housing Studies, told the NAHB Construction Forecast Conference in Washington last week. ...