The U.S. housing market appears to have bottomed out and looks likely to return closer to normal--but not boom--levels by 2012, a group of housing economists predicted today.

Enthusiasm with several strings attached was the prevailing mood expressed in presentations prepared for the National Association of Home Builders (NAHB) 2009 Fall Construction Forecast Conference. Those experts who did venture numbers suggested that housing starts, which were at a seasonally adjusted annual rate of 590,000 in September, would top 800,000 around mid-2010, crack 1 million in mid-2011 and go over 1.5 million during 2012. That's still significantly below the 2005-2006 boom years, however, when starts topped 2 million, or even what some economists regard as a sustainable housing demand of roughly 1.8 million starts. But for a beleaguered industry, any sign of growth is good news.

Indeed, after having to predict slumps at past NAHB conferences, the economists' presentations were nearly giddy in comparison. "Housing Market Recovery: Are We There Yet?" Robert Denk, NAHB's assistant vice president for forecasting and analysis, titled his presentation. The next slide gave his answer: "YES!"

Mark Zandi, chief economist at Moody's, entitled his speech "The Housing Crash Is Nearly History." And Carl Reichardt, managing director and senior research analyst at Wells Fargo Securities, said he thinks St. Patrick's Day was the date the market bottomed out this year.

NAHB Chief Economist David Crowe forecast that several key improvements in the economy--including employment growth, a reduced unemployment rate, and inflation-adjusted increases in the gross domestic product--all would start showing up sometime next year. He looks for a sharp, V-shaped recovery in both starts and in sales of new and existing homes to become apparent by next summer.

Joel Prakken, chairman of Macroeconomic Advisers, also saw better days ahead; he predicts private housing starts will rise from an annual rate of 614,000 this quarter to 1.1 million in the July-September period of 2010. But like the others, he cited several downside risks. They include lingering problems with the mortgage security markets, stingy bank lending to consumers, the possibility that home prices will erode again, and such unknowns as energy prices and the knock-on effects on the economy from health care reform. As one of Denk's slides suggested, we're on "The Long Road Back to Normal."