The NHF has forecast that house-builders will build just 122,700 homes between April 2009 and March 2010, which is 18,000 fewer than were built over the previous financial year.
Excluding the war years, the house-building figures for 2009/10 will be the lowest total since 1923/4, when just 86,000 homes were built.
The drop in houses is a result of private developers scaling back developments following the onset of the recession.
This decrease has fuelled fears that a housing shortage will leave millions trapped in overcrowded and substandard housing for a generation to come.
In order to solve this, the trade body said that spending on housing should be ring-fenced. It has called on the three major political parties to go into the forthcoming general election with a pledge to ring-fence spending on housing.
David Orr, chief executive of the NHF, said: “With record housing waiting lists and overcrowding reaching epidemic proportions in many places across the country, the need for more affordable housing has never been greater. The three main political parties must demonstrate their commitment to helping the millions of Britons in desperate need of an affordable home by pledging to safeguard investment in housing – and giving it the same priority as health, education and policing.”
