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Their warning came as Barratt Developments confirmed it was cutting more than a thousand workers – the fifth house builder this week to announce major job losses as a result of the dramatic slump in demand for new houses.
The credit crisis, which has meant banks and building societies have stopped offering cheap mortgages, has created an unprecedented slump in demand, according to the industry.
Roger Humber, policy advisor at the House Builders Association, said: "It is uniquely bad. There is nothing to compared it to since the end of the Second World War.
"There is a complete collapse of credit and the number of new homes changing hands has fallen by 70 or 75 per cent compared with a year ago."
Mark Clare, the chief executive of Barratt, said: "We don't envisage any recovery in the new homes market until mortgage availability is restored.
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"Housing production is now expected to reach its lowest levels for more than 50 years."
So far this week, 5,000 jobs have been axed, but this is only what has been confirmed from the five major developers, and only includes workers employed directly by the developers – not the army of sub-contractors, such as roofers, brick-layers, plasterers, plumbers and electricians.
Suzannah Nichol, the chief executive of the National Specialist Contractors Federation, which represents about 700,000 sub-contractors said: "We've been feeling the pinch since the start of this year.
"And what's made it worse for us is that the house builders have turned around and demanded we cut our prices by 5 or even 10 per cent. Some have even insisted on two price cuts this year."
Mr Humber predicts that up to 100,000 jobs could eventually be lost during the crisis. He pointed out that during the last recession Cambridge Econometrics estimated that for each house built, one job was sustained. Last year 190,000 new homes were completed, but this is expected to fall to 100,000 this year.
The house builders that have announced job losses have cut between 30 per cent and 40 per cent of their work force. If this percentage was applied to the entire house building industry, which employs 300,000, an estimated 100,000 jobs could be lost.
The collapse in the house building sector will mean that Gordon Brown's target of building 240,000 new homes every year until 2020 will be missed, leading to a significant shortfall in the target of three million new homes. Housing Minister Caroline Flint admitted that building three million new houses by 2020 was going to be a "challenge".
Interviewed on BBC Radio 4's Today programme the minister said the Government still wanted to see more homes being built and the three million figure is a "valid target".
The crisis has, however, created a possible silver lining for home buyers looking for a cheap home. House builders have started to offer significant incentives in an attempt to sell the unsold properties on their books. Bovis, for instance, is offering first-time buyers the opportunity to pay for 75 per cent of the property now and the remainder in 10 years' time.
Others are offering to pay first-time buyers mortgage for the first year. However, mortgage experts pointed out that the lack of availability of home loans would mean very few people would be able to take up the offer.
Melanie Bien, director mortgage broker Savills Private Finance, pointed out that many lenders would only give mortgages on new-build properties if buyers had at least 25 per cent deposit; some insist on 40 per cent deposit.
The grim news from the house building sector came as Halifax, the country's largest lender, said that average house prices were now £19,000 lower than at their peak last summer.
Michael Saunders, economist at Citigroup, said: "It is fair to say we are now in the worst housing slide for over 50 years."
