The slowdown in new homebuilding across European markets is likely to continue in 2008 and the near-term prospects look gloomy, according to a report released today by Standard & Poor's Ratings Services. Near-term prospects look gloomy due to growing inventories of unsold housing units, low affordability, and only modest economic growth, while the current financial market turmoil is likely to hinder a recovery in the sector in the foreseeable future, the report said. "After several years of very dynamic performance, new residential construction markets have shown a reversal in trading activity in 2007," said S&P's credit analyst Izabela Listowska. "Given their sizable share of the total European construction output -- one-quarter of the total -- this will weigh heavily on the overall construction industry's statistics and outlook." However, the report highlights that the downturn in residential housing is likely to be balanced by still dynamic civil engineering activity. The magnitude of the slowdown varies across European countries, with regions that experienced a housing boom in the past years such as Spain, Italy, Denmark, and Ireland being hit the hardest, the credit agency said, adding that other countries appear to be experiencing a market correction.