(FORTUNE Magazine) – -- Honk if you know anybody anywhere buying or building a home. Many of you, especially Northeasterners, will keep hands firmly away from horn. For as everyone this side of Mars knows, housing is in the tank. In July starts sank to the lowest level since the severe 1981-82 recession. With interest rates rising, the making of an even bigger bust may seem in the works. Yet FORTUNE predicts that homebuilding will soon pick up, with starts by the end of 1991 growing 100,000 units to 1.3 million at a seasonally adjusted annual rate (see chart, page 22). That's still low, but the turnaround will at least halt the big negative impact housing's decline is having on GNP. Key reasons to expect a revival: Easing house prices will induce would-be homeowners to buy, reducing the inventory of unsold houses and spurring new building. Mortgage rates won't get high enough to choke off demand. And aging baby-boomers are reaching the point where they have saved enough for a down payment and can realize the goal of owning a home, an ambition that remains firmly implanted in the American psyche. Only the multifamily market will remain severely depressed. Sales in July fell to 275,000 units, among the lowest levels on record. Vacancy rates are high, reflecting the tax-induced overbuilding of apartments and condos in the mid-1980s. Embattled S&Ls will limit loans to developers. And the number of people in their early 20s, the age when renting takes precedence over buying, is relatively small. Despite turmoil in financial markets after the Iraqi invasion, mortgage rates remain modest, just over 10%. We expect rates during the next year to hit 11%, still below the 12% or more real estate agents say would bite badly. Consumer confidence sank after the invasion, according to the weekly Sindlinger survey, but it steadied in following weeks. The same demographics that are holding down apartments and condos might also seem arrayed against the single-family market. After all, if fewer young people are entering the market, who will buy the houses of their elders who are seeking to move up? But consider a second question: What happened to the many 25- to 44-year-olds who didn't buy homes? Their homeownership rates are down several percentage points from a decade ago. Answer: The boomers are still potential customers. They married late. They had children late. And they are buying homes late. Surveys by Chicago Title & Trust Co. show that first-time buyers in the past few years were about 30 on average, vs. 28 for such buyers in 1976.

Baby-boomers feel just as strongly about homeownership as earlier generations did. According to a Roper Organization poll, 85% of people 30 to 44 rank owning a home as the most important part of the good life -- the same proportion as in a similar 1975 poll. Indeed, to boomers it's more important than a happy marriage. Can they get what they want? According to the National Association of Realtors, the median income of first-time homebuyers is well below what's needed to buy a median-priced starter home. But no law requires a first-time buyer to buy a median-priced house. A thirtysomething couple having their first baby, or second, may find a less-than-median-priced house attractive compared with their less-than-luxury apartment. The National Center for Health Statistics says the birthrate among 35- to 39-year-olds rose 41% from 1980 to 1988, to 28 births per 1,000 women. Chicago Title numbers show that boomers are also willing to tighten their belts to own a home: First-time buyers in 1989 saved for 2.9 years to accumulate their down payments, compared with 2.4 years in 1987 and 1988. Singles are becoming increasingly prominent as homeowners. They bought more than 15% of homes sold in 1989, vs. less than 10% in 1987. For baby-boomer singles in particular, the ownership rate has risen sharply in recent years. As the reality of soft markets sinks in, sellers are becoming more willing to deal. Take Dallas, where unit sales hit a record high in June and are up 25% for the year through July. The recovering Texas economy is playing a key role, but note well that prices have dropped a few percent from last year. The people selling homes are moving up, spurring tract developers to build custom homes, says Michael Bernstein, communications director of the Greater Dallas Association of Realtors. Texas also supports contentions by real estate agents around the country that mortgage money is plentiful. In Houston, the epicenter of the thrift mess, prices are up modestly, but even so, July sales were the best ever for that month. In some markets the seller still has the edge. Existing home sales in central Ohio jumped 10% through July from a year earlier, and prices rose 9%. Nancy Sharp, president of the Columbus Board of Realtors, says the time it takes to sell a house is stretching out. But, she says, a diverse economy, inexpensive starter homes, and the absence of a previous boom has led to ''steady, good growth.'' Builders will likely cope with slow growth by reducing the size and amenities of new houses, as they did in the past when pressed to the wall. The analogue in the market for existing homes is that sales of the most expensive ones -- those costing above $250,000 -- have been slipping as a share of the total. In July, when resales were 1.8% above the year earlier, the proportion of high-priced homes fell to 8.6% from 9.6%. Press reports of lower home prices have mostly focused on the losers -- ignoring that in every transaction there's also a winner. Look at them and give housing half a toot.

CHART: NOT AVAILABLE CREDIT: NO CREDIT CAPTION: UP FROM THE ABYSS Though multifamily building remains depressed, single-family starts will rise from their lowest in nearly a decade as softening prices spark demand, especially from baby-boomers.