SAN FRANCISCO -- In a troubling forecast for several important industries, economists and home builders said this week that the number of houses built in the United States will drop next year, possibly to the lowest level since the late 1960s.
The expected decline, which would mark the fifth consecutive year of reduced construction, would not be uniform across the country. Real estate experts told savings and loan executives at their annual convention here that the Midwest would fare better than either coast, and some metropolitan markets, such as Houston, could see increased building.
Nationally, however, the drop in housing starts would be another blow to the rapidly shrinking construction industry. Already, one of eight construction workers is unemployed, mainly because commercial building has nearly ground to a halt.
Now, with construction of single-family homes slowing markedly, many more in the building trades probably will be laid off from their high-paying jobs soon, according to the economists and home builders.
Other industries would be hurt as well. Particularly vulnerable would be manufacturers of products used to build and furnish new houses, from lumber and drywall to washers and dryers.
Slippage in these industries would, in turn, damage others sectors. Fewer orders for big-ticket appliances, for instance, would hurt steelmakers as demand for their products is reduced. Retailers also would suffer from the reduced sales.
"That will all contribute to the recession," said Anthony Downs, a senior fellow at the Brookings Institution in Washington.
Kenneth Rosen, chairman of the Center for Real Estate and Urban Economics at the University of California at Berkeley, said: "The worst is yet to come."
Because of long-term demographic trends, some real estate experts said the U.S. housing industry probably won't rise to its former heights until the 21st century, if then.
Residential construction peaked in 1986, when about 2 million homes were started. Since then, the number of housing starts has tumbled to an estimated 1.2 million this year, the lowest level since the 1982 recession.
But housing starts might be much lower today, said Lynn Michaelis, chief economist for Weyerhaueser Co., a Tacoma, Wash.-based producer of lumber and plywood.
Michaelis said that based on Weyerhaueser's sales of wood products since September, he figures housing starts have fallen to less than 1 million on an annualized basis. Looking ahead, he predicts the nation will build slightly more than 1 million homes next year.
Martin Perlman, president of the National Association of Home Builders, is a bit more optimistic. Though Perlman also sees a decline from 1990's level, the Houston developer forecasts about 1.1 million housing starts in 1991.
But Rosen said the number will probably be no more than 900,000, which would make next year the poorest for residential construction since the late 1960s.
The housing market probably will hold up better in the Midwest than in most other regions, the economists said. They said that is probably because the Midwestern economy still is growing on the strength of rising demand overseas for its manufactured goods.
Though housing starts have been declining for years, most of the falloff had been in construction of apartment buildings, which lost tax advantages under the 1986 tax law. Since last year, however, the number of single-family homes under construction has been dropping sharply, too.
One reason, real estate experts said, is demographics.
In the 1970s and 1980s, the baby-boom generation entered the housing market, demanding many more homes. Now, with the number of first-time home buyers down 15 percent to 20 percent from a decade ago, fewer new homes are required.
In the 1990s the United States will need to build only about 1.4 million housing units a year, Michaelis said.
Consumers also are deeply indebted, which makes buying a home more difficult.
Meanwhile, developers complain that they can't get financing because lenders, stuck with bulging portfolios of delinquent real estate loans, don't want to invest in any aspect of construction.