Power Lunch

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Power Lunch

Analysts See Further Declines in Housing Market


Susan Wachter, professor of real estate and finance at Wharton Business School, told CNBC’s “Power Lunch” that the housing market has yet to hit bottom.

“Sales are still declining, but they should turn around by the end of the year,” Wachter said.

She said the housing sector now faces a classic chicken-and-egg conundrum.

Housing Outlook

“We’re going to have to have more sales to have the visibility, but the market’s going to have to find the right pricing,” Wachter said. “(Pricing is) very local. The markets haven’t found the right pricing in many parts of the country.”

Thomas Smith, homebuilding analyst for Standard & Poor’s, said he expects housing prices to be flat or even slightly down over the next 12-to-18 months.

He expects housing starts to "find a bottom" in 2007, down about 25% from the peak levels in 2005. He said starts may tick up in 2008, but only because average prices have declined. If so, revenue for the home building industry will be weak.

Nevertheless, he said Meritage Homes, Centex and Standard Pacific are strong regional plays.