March 21, 2011
Nation's Building News

The Official Online Newspaper of NAHB

Economics and Finance
Eye on the Economy: Fragile Housing Demand Turns Down Again

Last week, NAHB Chief Economist David Crowe, testifying before the Senate Banking Committee on the fragile state of the nation’s housing market, urged caution on housing policy issues — including AD&C lending, reforming the GSEs, the Dodd-Frank financial reform law and preserving the mortgage interest tax deduction.

As if to prove his point, February’s housing production numbers plumbed new depths with housing starts remaining only marginally above their record low of April 2009 and with building permits falling to their lowest level on record in a series started more than five decades ago.

Crowe’s testimony — and the dismal state of the housing industry — were further punctuated by additional government data releases indicating that continuing consumer frugality and elevated savings are improving household balance sheets but undercutting a more robust near-term economic recovery. In addition, producer prices increased because of global factors, raising construction costs for home builders despite weakness in U.S. housing markets.

The Latest Postings 

  • Soaring Energy and Food Prices Push the Producer Price Index Up Further in February
    A sharp increase in food and energy prices pushed the Producer Price Index up 1.6% in February — its eighth consecutive rise. The price index for inputs into residential construction was up 1.0% in February, driven by increases in the prices of energy-intensive products. Most other building materials experienced a modest decline. Posted: March 16

  • Dismal Housing Report
    Housing starts fell 22% in February to the second lowest level in a series that goes back to 1959. The collapse was broad based, with single-family starts falling 11% and multifamily falling 46% from an unusually high January level. Posted: March 16

  • When Will Household Deleveraging End?
    One of the factors preventing a robust economic recovery is deleveraging, as households and businesses pay down debts and restore net worth to long-run norms. This is holding back consumption and investment and slowing economic growth. Analysis by NAHB indicates that household balance sheets will return to historic norms within the next three or four months. Posted: March 14 

  • An Improving But Fragile Housing Market
    Testifying before the Senate Banking Committee, NAHB Chief Economist David Crowe reported on the state of the nation’s housing markets and urged caution on housing policy issues. Posted: March 10 

  • Multifamily Survey Data Indicate Market Improvement
    NAHB’s multifamily indices point toward healthier market conditions for both new and existing apartment and condo buildings. Posted: March 10

  • The New Home in 2015
    Research by NAHB reveals the likely characteristics of newly constructed housing in 2015. The broad trends indicate houses will be smaller and have more green features. Posted: March 10

Eye on the Economy is a free, bi-weekly digest of the latest economic and housing policy news, analysis and studies as posted on NAHB’s free Eye on Housing blog. The preceding is a reissue of the March 17 edition. To subscribe to Eye on the Economy, click here.

Register for Spring Construction Forecast Webinar on April 27

The NAHB Spring Construction Forecast Webinar will provide attendees with up-to-the-minute analysis of the latest housing numbers and market trends right to their desktop. The webinar will be held from 2:00-4:00 p.m. EDT on Wednesday, April 27.

Speakers David Crowe, NAHB chief economist; Mark Zandi, chief economist with Moody's Analytics; and Robert Denk, NAHB’s assistant vice president for forecasting and analysis, will address issues affecting the housing industry and the economy — including competition from short sales and foreclosures, consumers' inability to sell their existing homes, appraisals coming in below construction costs, and restrictive lending conditions for buyers and builders — and how builder confidence and the market may evolve as those factors change.

The fee is $29.95 for NAHB members and home builders associations and $49.95 for non-members.

To Register

For more information and to register, visit



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