Right Outside My Window by Mary Ann Huberman. Published by Mondo Publishers.
I did this as a project with my art teachers. We read the book and performed the song, then talked about what they might see outside their own windows. The art teacher read the book, talked about what they might see (real or imagined) and had them draw a picture. I had them put what they saw to a rhythm and write a short melody to go with it. I would allow more time than you think it's going to take (we did it towards the end of school and had so many interruptions to the schedule, we didn't really have enough time). This is from an idea I got from an Orff Workshop over 15 years ago.