Buffet: Housing will recover -- eventually

OMAHA -- Billionaire investor Warren Buffett said Saturday that he had been "dead wrong" in predicting that the U.S. housing market would begin to recover by now, but he remains optimistic about the nation's economy.

In his annual letter to Berkshire Hathaway shareholders, Buffett said he is sure housing will recover eventually and help bring down the nation's unemployment rate. But he did not predict when that will happen.

Investors eagerly await the letter from Buffett, 81, dubbed the Oracle of Omaha, who built a roughly $44 billion fortune by following a steadfast, no-nonsense investing strategy.

Buffett said housing "remains in a depression of its own," but he said in typical plain-spoken style, that the housing market will come back because some human factors can't be denied forever.

"People may postpone hitching up during uncertain times, but eventually hormones take over," he wrote. "And while 'doubling-up' may be the initial reaction of some during a recession, living with in-laws can quickly lose its allure."

The housing slump has been painful for Berkshire. It owns more than 80 subsidiaries, including Geico insurance and See's Candy, and five of them rely heavily on construction activity.

Those businesses, which include Acme Brick, Clayton Homes and Shaw carpet, generated pretax profits of $513 million last year. That's well off the $1.8 billion those companies added to Berkshire in 2006.

Berkshire's insurance companies took $1.7 billion in catastrophe losses last year, including from the earthquake and tsunami in Japan. Berkshire reported only $154 million in underwriting profit, down from $1.3 billion the previous year.