The drop in home-building activity this year will be the sharpest in 35 years, housing economist Michael Sumichrast said this week, predicting that housing starts will fall to an annual rate of 875,000 before the end of this year, compared with more than 1.7 million last year.
The chief economist for the National Association of Home Builders told Northern Virginia builders that the Carter administration's proposed fiscal package is "a step in the right direction, but is three years too late." He said that there are no short-term solutions to the coninuing problems of a decline in productivity, lowered rates of personal savings and disincentives for capital formation.
Speaking to more than 100 persons at the same new-home marketing seminar sponsored by Long & Foster Real Estate Inc., mortgage banker Lawrence Ochsman told the builders that high mortgage rates and the difficulties of obtaining financing are depressing normal buying interest. He urged them to continue buying land because landowners are "open to negotiation." He also said that reputable foreign investors have money available for housing ventures here.
Howard Orebaugh, an executive with Washington Federal Savings and Loan Association, which does a lot of business with home builders, admitted that it is "difficult to be upbeat in these times." He urged the builders to talk to their lenders -- before major financing problems develop because the lenders are not eager to foreclose.
The National Association of Home Builders has scheduled "emergency action days" here Tuesday and Wednesday to tell the Congress and the administration that the housing industry "may soon be engulfed in a crisis of catastropic proportions," in the worlds of NAHB president Merrill Butler.
NAHB members will lobby for a federal subsidy of interest rates for some moderate-income buyers or new houses. Builders will also ask for removal of restrictions against the use of tax-free revenue bonds for house construction.
As housing starts decline, the lumber and building materials industry is suffering "severe financial malnutrition," the National Lumber and Building Material Dealers Association said this week.
At a conference here this week, the association backed the permanent extension of the federal preemption on state usury ceilings on mortgage loans, favored a balanced federal budget, opposed wage and price controls and supported more tax incentives for small savers.
The Weyerhaeuser lumber company said Wednesday it plans to layoff about 1,000 employes at its plans in Dierks and Murfressboro, Ark., between April 4 and April 13 because of a decline in new housing construction.
C. H. Wiggins, Weyerhaeuser's Southwest Arkansas region vice president, said forest products company would temporarily curtail wood, lumber, and plywood manufacturing operations.
"Current economic conditions we now face left us with no other alternative," Wiggins said.
And, as sales of "used" houses declined across the country in February, the National Association of Realtors announced that resales fell to an annual adjusted rate of less than 3 million units, a drop of 7 percent from the 3.2 million level in January. The total decline since the Federal Reserve tightened the money market last October was 17 percent, the NAR said.
However, a report on District residential sales in February showed an increase in total units sold -- 524, compared with 458 a year earlier. The average sales price was $79,936. More than two thirds of the February sales were condominium units, according to figures compiled by Rufus S. Lusk & Son Inc., publisher of real estate transactions.
The Lusk reported on D.C. residential real estate activity also noted that the average sales price of condominiums dropped 6.4 percent, from $72,316 in January to $67,707 in February, and that the average house price declined 6.1 percent, from $94,441 in January to $88,651 in February. For all of 1979 the average condominium sale price was $71,060 and the average house price in the District was $95,080.