Without question, 2008 qualifies as a huge news year in the history of the home building industry. It was a year of many firsts. It was a year of unprecedented government action. It was a year of tremendous financial distress among home builders.

The year is likely to be remembered for the first government rescue of a non-bank financial institution. Also, 2008 was the year the government took over secondary mortgage players that were supposedly private companies. And housing starts dropped to levels the industry hadn't seen in decades.

It was difficult to settle on just 10 major stories, but here's our list.

10. Kimball Hill liquidates. The most recent builder liquidation showed how few investors are willing to come to the rescue of bankrupt builders. Kimball Hill was all set to be sold to an investor when, at the last moment, the investor got cold feet. Worry about the company’s huge land exposure and its exposure to a weakening Texas market killed the deal. Several other potential investors have previously backed out of the running.

9. Bank of America buys Countrywide. With one fell swoop, and about $4 billion, Bank of America became the nation’s largest mortgage lender. Countrywide controlled 25 percent of the mortgage origination market and 17 percent of the mortgage servicing market in 2007.

8. Government agrees to buy troubled assets. In an historic move, Congress last summer authorized the Treasury to spend up to $700 billion to buy troubled assets and make direct investments in financial institutions. The Treasury used most of the first half of the TARP funds to take stakes in banks and financial institutions, incurring the wrath of Democrats in Congress who wanted to see the money used to alleviate foreclosure distress. At press time, the Bush administration was poised to use some of the money to bail out troubled auto makers.

7. TOUSA files for bankruptcy. Though many other home builders went out last year, TOUSA, with $2.2 billion in liabilities, was the biggest. The company’s problems spoke to the difficulties faced by most builders of size: too much land, too much bad debt, and too much exposure to joint ventures. TOUSA, which includes Newmark Homes, Trophy Homes, and Engle Homes, was the 13th largest home builder in 2007.

6. Construction lending dries up. Among its many ill-effects, the credit crisis virtually dried up construction funding for home builders. Without the financial backing to finish subdivisions and generate cash, many builders were forced into bankruptcy or liquidation. The situation got so bad that builders organized a group to press banks for better fiscal behavior.

5. Federal Reserve Board agrees to buy $600 billion in bad mortgage-backed securities. Mortgage interest rates remained stuck, even after Congress passed the TARP bill, until the Federal Reserve Board announced that it would buy up to $600 in bad mortgage-backed security assets. This was the move the credit markets apparently were waiting for. Mortgage rates dropped virtually overnight. At close to 5 percent, they are back to levels last seen in the 1960s.

4. Congress enacts a housing tax credit. Last summer, in an attempt to boost the housing market, Congress created $7,500 tax credit for first-time home buyers who can close before July 1, 2009. The gift was about as well-received as grandma’s fruitcake. Within months, builders reported that it was having little to no impact on sales. Eliminating seller-provided downpayment assistance on FHA loans, another provision in the bill, had a big negative effect on builders, though.

3. Treasury takes Fannie Mae and Freddie Mac into conservatorship. For years, these government-sponsored agencies operated with an implied government guarantee. The Feds made this explicit when they in effect took over the enterprises, leaving the next administration to figure out how best to provide liquidity in the mortgage market. The home building industry has a huge stake in the outcome.

2. Foreclosures crest at 1.9 million. It’s tough to get an accurate read on foreclosure levels, with several competing data series to analyze, but by most accounts foreclosures rose to record levels last year. A major reason? Plummeting home prices that resulted in trillions of dollars in lost equity for homeowners. Moody’s Economy.com reported that they reached 1.9 million homes last year and forecasted roughly the same levels in 2009, though data from RealtyTrac indicates that foreclosures started to abate late in the year. This much is certain, though--there were more foreclosed houses than new homes sold in 2008.

1. Housing starts dip below 1 million. Though every last bean hasn’t been counted, the housing industry was all but certain to start fewer than 1 million homes in 2008. Moreover, starts for November came in at an annualized rate of only 625,000. You have to go all the way back to WWII for a level of start that low. Moreover, most housing forecasters are calling for another 20 to 30 percent decline in housing starts in 2009, with an upturn in 2010.