After three and a half years of a negative stance on the future of housing, Michael Rehaut, an analyst at JPMorgan (JPM), sees the housing market currently past its trough and driving toward recovery over the next 24 months. During the downturn, supply rose and demand dropped as a variety of buyers left the market. Today, supply seems “more manageable” and demand is beginning to reemerge, according to the research. With the market’s stabilization, Rehaut reported that builders will demonstrate growth, which has been a historical catalyst for recovery, and home prices will approach the end of the current period of decline. While Rehaut said he is impressed by the current rally in homebuilder stocks, he reported that the surge is well below prior recoveries that followed a recession. The top six builders’ stock fell 86% from an ’05 peak and gained 105% from the low in March, compared to the 55% and 66% losses during recessions in 1982 and 1990 and the respective rallies of 171% and 486%, according to the report. But the currently rally will continue to surge upward and will even surpass the gains of those last two periods, the report noted. Over the next 24 months, analysts do not expect housing starts to make a quick upturn toward historical averages while they are still 31% below Q308 levels, which is prior to the fall of Lehman Brothers and 60% beneath their 25-year average. HousingWire reported that housing starts remain down 29.6% from August 2008, according to a study by the US Department of Housing and Urban Development (HUD). Despite the slowdown in completions, housing starts are approaching a bottom if they have not reached one already, according to Brad Hunter, the chief economist at Metrostudy. The JPMorgan report indicates housing starts can see a “moderate recovery” as they have usually rebounded with GDP growth, which the economic team at JPMorgan expects to see through 2010. Builders will first show order growth and share gains in Q409 of 4%, according to the report, followed by a wave throughout 2010 to 27% by the end of the year, driven by modest improvements in the pace of sales and community growth. Write to Jon Prior.