No cellar is seen for housing slump

“Springtime usually means good times in the housing industry, but this year it’s threatening to become a grim season of reckoning. Signs of a sobering slowdown emerged throughout March, ranging from gloomy forecasts among home builders to a growing number of high-risk borrowers struggling to make payments on exotic mortgages they probably couldn’t afford in the first place. The bleak news threatens to weigh on already drooping home prices, a factor that could undermine potential sales: Prospective sellers may hold off on selling in hopes of a turnaround, while prospective buyers may procrastinate in hopes of getting an even better deal later in the year. The additional dent in home sales could further undermine the overall economy, eroding demand for home furnishings and materials for renovations. Reflecting the worries about the growing threat, economist Steven Cochrane says the risk of a recession beginning later this year is increasing. He estimates there is a 25 percent chance of a recession within six months, up from 20 percent in February. ‘Things seem to be snowballing,” said Cochrane, a senior economist with Moody’s Economy.com. ‘It’s going to be a weak spring’. “