Report: U.S. housing slump a prelude to recession

NEW YORK – June 24, 2008 – A bottom to the housing slump is nowhere in sight and, if history is any guide, a recession is mostly likely lurking around the corner, an academic study showed Monday.

Harvard University’s Joint Center for Housing Studies painted a bleak picture of the current housing downturn, pegging it as possibly being “the worst in a generation” in its “The State of the Nation’s Housing 2008” report.

The study noted that housing starts, new home sales and existing home sales are at all-time lows since after World War II, while home price declines and mortgage defaults are the worst on record.

“We’ve never had so much information or data in uncharted water,” said Eric Belsky, the Joint Center’s executive director. “A recovery is not anywhere near in sight.”

A recession followed six of the last seven housing downturns, he noted, usually within two years. However, after the recession ended, housing starts typically rebounded strongly after inventory fell and new home sales picked up.

The report and its authors didn’t give a timeframe for a housing turnaround, but expect immigration growth to be a key factor in rejuvenating the market.

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