Deeper Downturn

Toddi Gutner

It’s bad news when dismal reports on the residential real estate market are revised downward. Well, that’s just what Ed McKelvey of Goldman Sachs recently did when he re-examined his housing sector estimate from his mid-January report “On Track for a Downturn in Housing (1/13/06).

In that report, McKelvey reviewed eight leading indicators of the housing market and concluded that real residential investment would be down 6.6% next year. Now, he says, “ Housing is still on track for a significant setback; if anything, it looks deeper than it did before.” He says he expects “real residential investment to be down 9.3% next year, slicing 0.5 point off of real GDP growth before taking induced consumption effects into account.”