Home Sales, Prices Will Continue
To Slide, Trade Group Predicts

A realtors' association on Tuesday further pared back its forecasts for the housing market this year, saying stricter lending standards and subprime mortgage woes are producing headwinds for the sector.

In its latest forecast for the real-estate market, the National Association of Realtors projected that existing home sales will fall 2.9% this year to 6.29 million, compared with its previous forecast of a 2.2% decline.

The drop-off for new home sales is expected to be more severe. The NAR said new home sales are likely to fall 18% to 864,000, compared with the prior forecast of a 14% drop.

The NAR also continued to forecast the first annual decline in the median national existing home price since it began keeping records in the last 1960s.

The national median existing-home price is forecast to slip 1.0% to $219,800 this year, and then rise 1.4% in 2008. The median new-home price is expected to be essentially unchanged at $246,400 in 2007, and then rise 2.2% next year.

The withdrawal of overly-optimistic and speculative buyers is likely behind some of the downshift in the housing market, NAR said. "Home buyers today are purchasing for the long-term, generally with a realistic expectation of modest gains over time," said Lawrence Yun, NAR senior economist, in a statement.

"It's good that we're getting beyond the tendency of some buyers to view housing as a temporary asset to accumulate short-term wealth, which is not to be expected in a normal market," Mr. Yun added.

Mr. Yun said strength in other areas of the economy is helping to prop up the faltering housing markets.

"If it weren't for a favorable economic backdrop, housing would probably have a hard landing," Mr. Yun said. As it is, "we see this as a soft landing with home sales rising gradually in the second half of the year and prices recovering a bit later," he added.

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