US housing will begin to gradually recover in the second half of this year according to David Goldberg, home-building analyst for UBS, a global financial services firm. Here are their 10 predictions for housing in 2010:

1. “Fundamentals will remain ‘choppy’ in the first half of the year, with conflicting data points making it difficult to ascertain whether we’ve actually reached the trough in housing.”
2. “Headline risk, primarily driven by the government’s efforts to extract itself from the mortgage market, will drive the homebuilding stocks down 15% or more from current levels…With the longer term path for fundamentals offering limited clarity, we expect the homebuilding stocks to remain quite volatile and extremely sensitive to news flow.”
3. “The previous prediction notwithstanding, the government is going to do everything in its power to protect home prices…In the end; we believe that concerns about higher rates and declining mortgage market liquidity won’t amount to much. In our opinion, the government continually made it clear that it is working to limit further home price declines given the serious ramifications these declines would have for both consumers and lenders.”
4. “Although we forecast that as many as 7 million foreclosures are likely to occur over the next several years, we believe the pace at which these homes will come to the market will be consistent with current levels. As such, the concerns around the negative impacts of rising inventory levels are overdone.”
5.  “An improvement in unemployment is the single most important predictor for the longer term health of the housing market – only by focusing on this variable can we truly understand the timing for a recovery.”
6. “An improving jobs picture will drive greater price stability and better demand. That said, given the level of excess inventory, the pace of price appreciation will be below trend for some time.”
7. “The builders will see sequential improvements in their quarterly results.”
8. “Given the limited amount of high quality, finished lots coming to market, we expect the builders to increasingly consider purchasing undeveloped parcels, which represent a greater value. This trend will be magnified if conditions start to accelerate more meaningfully in the near term as builders look to rebuild their operations over time.”
9. “Although residential construction lending standards might loosen in 2010, liquidity will be insufficient to drive starts toward current consensus estimates.”
10. “The longer term outlook for housing will increasingly dominate investors focus toward the end of 2010.”