It has taken nearly two years of steady declines in the housing market but the strong materials price escalation of the previous three years appears to have been knocked off balance. Inflation still has some strong niches, especially among metal products, but overall construction inflation is easing.
“Every month of this year, we have had to revise down our housing forecast, and with each new revelation of the housing bubble blow-up, we have become a little more pessimistic,” says John Mothersole, economist with the Washington, D.C.-based forecasting firm Global Insight. Housing starts declined 13% last year and Mothersole estimates they will fall another 25% during 2007. “The housing market still has further to fall and we are looking for another 15% decline in 2008,” he adds.