For U.S. homeowners, builders, bankers, and real estate agents, the crash of 2007 will only get worse in 2008.

Everyone from mortgage-finance company Fannie Mae to Lehman Bros. Holdings Inc. expects declines next year. Existing-home sales will drop 12 percent, and existing-home prices will fall 4.5 percent, Washington-based Fannie Mae says. Lehman analysts estimate that almost 1 million mortgage loans will default in 2008, up from about 300,000 this year.

"We're only halfway through the housing shock," said Ethan Harris, chief U.S. economist at New York-based Lehman. "It's just a matter of time before the weakness spreads to the rest of the economy."

The housing-market collapse has been anything but the "soft landing" that Federal Reserve Bank of San Francisco president Janet Yellen and David Lereah, former chief economist at the National Association of Realtors in Chicago, predicted for real estate at the start of 2007.

Median home prices declined in the United States this year, the first annual drop since the Great Depression, according to forecasts from the Realtors association.

"I'm not going to sit here and tell you it's going to turn real strong next year," said Jim Gillespie, chief executive officer of Coldwell Banker Real Estate Corp. "It's not going to turn real strong next year."

Analysts at CreditSights predict that housing will not rebound until "2009, at best." Moody's Economy.com Inc., the economic-forecasting firm in West Chester, says home sales will hit bottom next year, declining 40 percent from their peak. And U.S. Treasury Secretary Henry M. Paulson Jr.'s plan to slow foreclosures will not help those who already face the loss of their homes.

The number of Americans behind on their mortgage payments rose to a 20-year high in the third quarter, the Washington-based Mortgage Bankers Association said earlier this month.

"The whole thing has deteriorated faster and further than we or anyone else had anticipated," said Ron Muhlenkamp, president of Wexford, Pa.-based Muhlenkamp & Co. Inc., which has about $2.5 billion under management and holds shares of mortgage lender Countrywide Financial Corp. and home builder the Ryland Group Inc.

The five biggest U.S. home builders by revenue, led by Miami-based Lennar Corp., recorded write-downs and charges totaling about $7.5 billion this year for land that plunged in value.

Mortgage companies, including Irvine, Calif.-based New Century Financial Corp., the second-largest subprime lender in 2006, have filed for bankruptcy protection after borrowers, unable to repay their loans, defaulted.

H&R Block Inc., of Kansas City, Mo., shut Option One Mortgage Corp. this month after plans to sell the subprime-lending unit fell apart, and U.S. regulators ordered Santa Monica, Calif.- based Fremont General Corp. to stop selling subprime mortgages, loans given to people with poor or limited credit histories or high debt levels.

Bank and brokerage write-downs and losses related to subprime loans totaled more than $80 billion. Citigroup Inc. last month said it would write down the value of subprime mortgages and collateralized debt obligations - securities backed by bonds and loans - by $8 billion to $11 billion. At Merrill Lynch & Co. Inc., write-downs on mortgage-related investments and corporate loans have cost the world's biggest brokerage $8.4 billion.

The losses led to the ouster of Merrill chief executive officer Stan O'Neal and the resignation of Citigroup CEO Charles O. "Chuck" Prince III. O'Neal's exit came after he said as late as July that "not even a sharp downturn in one market today necessarily portends financial disaster in another, and we're seeing this play out today in the subprime market."

Some economists and real estate executives say the industry may be on the verge of turning around. Lawrence Yun, chief economist at the National Association of Realtors, said: "We are touching the bottom" for existing-home sales. Coldwell Banker's Gillespie said demographic and economic changes, such as rising immigration and employment, would help boost home sales.

"People buy for lifestyle, and there's a lot of pent-up demand out there," Gillespie said.

U.S. office sales fell 70 percent in October from a year ago, industrial sales declined 24 percent, and retail and apartment sales dropped 50, according to New York research firm Real Capital Analytics. The declines are the biggest since the company began keeping records in 2001.

"I know we weren't predicting things would get this bad," said Frank Liantonio, executive vice president for global capital markets at New York-based Cushman & Wakefield Inc. "There were some signs there, but I don't think anyone anticipated the level of dislocation that was actually created."