Housing forecasts, not unlike batting practice for baseball players, are a ritual for the industry that provides new shelter for Americans.
Despite a continuing torrid housing market in many areas - against a backdrop of rising mortgage interest rates - predictions for residential construction remain moderately strong through the rest of 1978.
A year ago, most of the forecasts for 1978 were off the mark on the down side because residential construction was on the upswing from a depressed market in 1974 and 1975. The 1976 total of 1.5 million was average but on the upswing. Then, single-family starts hit a new high (1.45 million) in 1977 to push the year-end total to nearly 2 million.
Now, a consensus of views indicates that starts are expected to total 1.8 million units in 1978. While that's an annual downturn of nearly 200,000 dwellings, all in the single-family category, the market performance to date has been strong both in production and sales.
This year's performance may take place against a backdrop of rising mortgage interest rates, which were averaging 8 3/4 percent last summer and are now up to 9 1/2 percent.
Experts who gathered under the roof of the National Association of Home Builders this week said they fear that a 10 percent mortgage rate may become a reality by the end of the year. They also indicated that inordinate inflation is expected to continue.
One economic consultant, who last November predicted a decline in starts to 1.75 this year on the basis that the economy "would run out of gas," now sees a decline of housing starts in the latter half of this year to a year-end total of 1.8 million.
Leonard Santow, of J. Henry Schroder Banking Corp. in Chicago, also sees starts dipping of 1.5 million in 1979 and then bottoming early in 1980, with Americans likely to experience repayment problems on outstanding credit. One reason: the federal budget outlook is "grim" and softness in housing resales (now strong) is likely to develop and affect new house sales to move-up buyers.
NAHB chief economist Michael Sumichrast reported that costs of housing were continuing to rise and he said there would be no relief from the pattern that produced a 15 percent increase in 1977.
Morris Mark, of the investment firm of Goldman, Sachs Co., reported that builders are disciplining themselves against possible overbuilding this year. He said there is no fear that there will be a housing pratfall such as the one in 1974.
Jay Janis, a former builder who is undersecretary of the Department of Housing and Urban Development, balanced pros and cons in current housing market to come up with a forecast of 1.8 million housing units this year. He said there was also a possibility that 10 percent mortgage interest rates would cause starts and sales to fall. Janis said mortgage credit is currently "adequate."
Janis reported that there is increasing consumer use of graduated mortgage payment loans introduced earlier this year by HUD. With these loans, initial payments are lower for buyers of moderately priced houses.
Professor Kenneth Rosen of Princeton University commented that the push pressure on interest rates is "ominous" and he said inflation could get worse. He predicted that there would be no dimunition of consumer demand for housing but said household formations may level off 1979.
Two economists representing the savings and loan industry acknowledged that there have been recent declines in new savings but they discounted the chances of any major disintermediation of funds.
In the Nation's Capital, housing and real estate professionals are still showing delight in the continuing high level of new and existing home sales. The totals for the first four months of this year have been stronger than expected, mainly because the upturn in interest rates has not yet turned off consumers.
However, new home permits declined 13 percent in the first quarter of this year to 3,825 units in this metro area, with Montgomery County showing an upturn while Fairfax had a decline.