Goldman Sachs’ chief U.S. economist Jan Hatzius thinks the worst is behind the housing market. “The point of maximum deterioration in housing activity has probably passed,” he wrote in and October 20 research report. “The sharp downturn of the past year seems to have brought total housing starts—single-family starts, multi-family starts, and mobile-home shipments—close to the level justified by the underlying demographics.” David Rosenberg, North American economist at Merrill Lynch disagrees: “Our research suggests that this housing cycle does not bottom out until starts reach the 1.3 million mark. So contrary to popular opinion, we are barely in the fifth inning of this down-cycle on the construction front.”

Who’s right? If you listen to the markets, it’s Rosenberg. Futures traders playing the Chicago Merc’s housing futures are collectively forecasting another 7% decline over the next 12 months.
Is Housing Out of the Woods? [Business Week]