NEW YORK -- The long-awaited bottoming of the U.S. housing market may be in sight, but a recovery could take as long as 18 months and will likely be muted, Fitch Ratings said in a report on Wednesday.

"Single family housing starts and new home sales seem to be indicating a trough, albeit at very low levels by historical comparisons," said Bob Curran, lead author of the report.

In its report, Fitch said that pent-up demand for new homes has been building for the past few years while home prices have been sharply declining since the housing bubble burst over two years ago.

Meanwhile, this year's spring selling season was notably stronger than the winter and "seasonally adjusted new home sales and single-family housing starts appear to have stabilized in recent months," the report said.

Fitch cautioned that even with fewer competitors builders will continue to be challenged and need to maintain tight controls over costs and expenses between now and the end of 2010.

"The early stages of this recovery may be more muted than average recoveries of the past," Curran said. Housing weakness will continue through "most, if not all, of 2009, despite recent government initiatives."

The agency expects that builders will continue to either cut back on or stabilize their land purchases for at least the next six months."

The agency said it will hold a conference call on Friday, July 17 and 11 a.m.