After what can only be described as the toughest year for American housing markets in decades, the big question is: When does this all begin to turn around?

Two of the nation's most prominent real estate economists weighed in this subject recently and their end of the year forecasts aren't too far apart from one another.

Dr. David Seiders, chief economist of the National Association of Home Builders, had this to say: Our "housing forecast shows systematic improvements in home sales by the second quarter of 2008, improvement in home starts by the third quarter, maintenance of low levels of manufactured housing shipments throughout 2008, and modest declines in the real value of residential remodeling next year."

"In this forecast," Dr. Seiders added, "residential fixed investment continues to contract during the first half of 2008, but posts modest growth in the second half of the year."

Now here's the outlook from Dr. Lawrence Yun, chief economist of the National Association of Realtors: "The broad trend over the coming year will be gradual rise in existing home sales, but because sales are exceptionally low for the final months of 2007, total sales for 2008 will only be modestly higher than for 2007."

Dr. Yun added that the key positive change underway has been that the "unusual mortgage disruptions that peaked in August were finalized in September and October," and now the trendline in pending home sales is up.

You might think these two economists take notes from each other, but believe me … they have totally independent economic models, and answer to two very different constituencies -- new home builders on the one hand, and they definitely had an extremely difficult year in 2007 -- and Realtors on the other, who suffered the greatest pains in the once-booming markets where sales and price appreciation went off the charts in 2003 through 2005.

We'll check back and monitor the accuracy of both forecasts as the new year develops.

But let's be frank: After such a run of down and bad numbers through most of 2006 and 2007, will it really be a big surprise if housing demand and sales and new construction finally begin showing signs of recovery -- even modest recovery -- in the year ahead?

We at Realty Times think it's a very good bet.

Published: December 31, 2007

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Kenneth R. Harney writes an award-winning, nationally-syndicated column on housing and real estate from Washington, D.C. He is also managing director of the National Real Estate Development Center, a professional education company. He is a past member of the Federal Reserve Board's Consumer Advisory Council, a committee that by federal statute reviews all Fed actions on home mortgage, consmer credit and banking industry regulation. He served as a member of the U.S. Department of Housing and Urban Development's Working Group on Computerized Loan Origination (CLO) systems, and is a member of the Editorial Board of the Fannie Mae Foundation's journal, Housing Policy Debate. He is the author of two books on mortgage finance and real estate.