As far as housing markets go, this summer is a bust. Pending sales of existing homes is down, and sales of new homes have plummeted. Foreclosures in the first half of the year rose in 75 percent of metropolitan areas. And, while mortgage interest rates hit record lows (again!), fewer people are able to refinance thanks to declining home prices.

John Burns owns a real estate research and consulting firm that is based in Irvine, California, but has offices across the country. His clients include some of the biggest companies in real estate.

But the guidance they’re paying for isn’t that cheering: Burns economic scorecards of late have awarded mostly Cs, Ds, and Fs, to various aspects of the housing market. (You can see his latest scorecard here:

Here are some of the things he’s thinking about these days:

What’s the biggest problem currently facing the housing market?

“The problem now is the underlying demand for housing that is affected by job growth and mortgage rates. What is different is that we have job growth and mortgage rates are increasing, but the demand for housing is down because the prices are too high.

“(We look at the number of) months’ of supply of homes, which is a ratio of sales volume to home sales. Right now we have 9 months of sales supply, which is 2 months above average. And that may be changing to 11 to 13 months, which is a risk” to the housing market.

What is your best advice for buyers and sellers?

“The amazing positive in the market is affordability. I do question whether sellers are selling to rent, selling to buy a new home or relocating? If they are selling to buy in the same market, they are not playing the market.

“Relocating is a more interesting opportunity. For example, if someone in the Northeast wants to retire in Florida, it is a great time to relocate to Florida because that market has corrected more than others and home prices are dropping.

“Some people think they can time the market perfectly, but you can’t.”

Where’s the best market for new construction right now?

“Houston is a good market that has held up construction-wise. Other markets have dropped 80 percent, but Houston has only dropped about 60 percent. We think construction is bottoming out this year and will trend up next year. We will see openings for new communities, the selling of homes, and developers buying land from the bank for new construction” projects.

What does the road to recovery look like for the housing industry?

“We can’t be too optimistic because right now we’re bouncing along the bottom, but long term views are important.

“Right now, we’re seeing the forming of new households. Developers have stopped building new homes, but there is lower vacancy because people are forming households, which can lead to new construction projects later on.”

How do immigrants affect the U.S. housing market?

“The US is still a great place to live, especially if you live south of the border. We think it is tough to live now (with the recession), but there are more opportunities here, so we will continue to see immigrants (come to this country).

“Immigrants tend to rent first, but eventually they buy houses. So first they help the apartment market, and then they help the housing market.”

What part of the housing market isn’t recovering?

“Unsuccessful loan modifications have created a situation where 8 million homeowners are not paying their mortgage and most will probably lose their house.”

What’s happening with distressed property, like foreclosures and short sales?

“There is a tremendous appetite to take advantage of the distressed market, and people see that. There may be a dearth of home sales and banks trying to modify loans.”

Where will we be in 6 months?

“In six months it will be February, so the housing market should be better. February will begin the spring selling season. Hopefully we see banks putting foreclosed homes on the market responsibly and not all at once or we may see a bigger problem” with foreclosures and declining home prices.