Buffett: Stimulus won't fix housing market

The housing sector remains depressed and is an anchor on the economic recovery, billionaire investor Warren Buffett said Monday. 

But he does not think a fix for the housing market’s woes can be found in Washington. 

"It would be a terrible mistake to try and do some Cash for Clunkers type thing" to try and boost home sales, Buffett said, referring to the Obama administration’s stimulus program for the auto industry.

"What's needed in housing is to create more households than housing units," Buffett told CNBC. He predicted that change would happen gradually across the United States. 

The “Oracle of Omaha” said he had expected to see greater improvement in the housing sector earlier this year, but had misjudged the severity of the problem.

"Surprise, we had this huge inventory," he said. "We're drawing down on the inventory every day, I don't know how long that takes, but I know when it's through, when we've reached something close to a balance, that we will have at least a million households being formed annually." 

Recovery of the housing sector will make "unemployment will go down a lot," Buffett predicted. 

He said a bill introduced by Sen. Charles Schumer (D-N.Y.) that would attract more foreign investors into the U.S. residential housing market "could actually change the number of households in the United States."

"It might not be a big factor, but that is the basic equation," he said. "And it is going in our favor, but this wasn't created in a week or a month. Then it won't, you know, it won't be solved in a week or a month, and it won't even be solved this year, like I said it might be."

Residential construction and anything connected to the industry is "what is getting killed" and is in depression; outside of housing, the U.S. economy is doing well, Buffett said.

"You have a huge segment of the American economy that's doing really quite well," Buffett said. "Then you have this other segment which is in a depression, and that depression has much more effect on unemployment, I believe, than is generally realized."

Buffett said his five largest Berkshire Hathaway businesses outside of insurance, including Burlington Northern Railroad, MidAmerican Energy, Marmon, ISCAR and Lubrizol, will set a record for earnings this year. 

"In aggregate they will earn $9 billion pretaxed, and it's a record for all five," he said. "And they cut across industry. And if you look at many of our smaller businesses, our recreational vehicle business, our farm business, you name it, they're all doing well."

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