Lawrence Yun, NAR chief economist, said sales activity is expected to
remain soft through the first half of the year despite a generational
low in mortgage interest rates.  "Household formation was only half of
what it should have been last year given the demographics of a growing
population and sustained job growth, so there clearly is a pent-up
demand from buyers who are on the sidelines," he said.

"Existing-home sales have moved narrowly since last September, but
when the full impact of higher loan limits for conventional mortgages
begins to impact the market there is likely to be a notable rise in
home sales and prices.  If higher limits are enacted very quickly,
we'll see a faster and more meaningful recovery by expanding safe,
affordable financing in high-cost areas - that, in turn, would help to
stimulate overall economic activity."

The Pending Home Sales Index,* a forward-looking indicator based on
contracts signed in December, slipped 1.5 percent to a reading of 85.9
from a downwardly revised index of 87.2 in November, and was 24.2
percent below the December 2006 level of 113.3.  "We're seeing a
pattern that is consistent with skimming along the bottom of the
cycle, and sales could ease modestly," Yun said.

The PHSI in the Midwest rose 3.4 percent in December to 84.9 but is
17.3 percent below a year ago.  In the Northeast, the index slipped
1.7 percent to 68.9 and is 26.0 percent lower than December 2006.  The
index in the South fell 3.0 percent in December to 96.4 and is 27.0
percent below a year ago.  In the West, the index declined 3.1 percent
in December to 83.9 and is 24.1 percent below December 2006.

Existing-home sales are projected at an annual pace of around 4.9
million in the first half of this year, rising notably to 5.8 million
in the second half, and totaling 5.60 million for all of 2009.  The
aggregate existing-home price should decline 1.2 percent in 2008 to a
median of $216,300, and then rise 3.2 percent to $223,200 in 2009.

"Areas with a high prevalence of subprime lending will continue to
feel downward price pressure.  Where builders have cut construction
sharply, and in most areas with improving affordability conditions,
we'll generally see moderately higher home prices," Yun said.

Current housing conditions vary widely.  Preliminary data shows rising
home prices in areas such as Rochester, N.Y.; Charleston, W.V.;
Waterloo-Cedar Falls, Iowa; and Albuquerque, N.M.  Fourth quarter
metro area median existing-home prices, showing changes in
approximately 150 markets, will be released February 14.

New-home sales are likely to decline 17.7 percent to 637,000 in 2008
before rising 7.6 percent to 685,000 in 2009.  "Builders will further
lower new home construction throughout this year and into 2009 to
bring inventory under control," Yun said.  Housing starts, including
multifamily units, are estimated to fall 20.1 percent to 1.08 million
this year, and decline another 1.3 percent to 1.07 million in 2009.
The median new-home price is expected to fall 4.3 percent to $236,300
in 2008, and then increase 5.0 percent in 2009.

The 30-year fixed-rate mortgage is forecast to rise slowly to the 5.9
percent range in the fourth quarter, and then average 6.3 percent in
2009.  "Affordability conditions are anticipated to rise 14.2 percent
this year, permitting more people to become homeowners, but buyers
should avoid aggressive lenders and not over-stretch to enter the
market," Yun said.  NAR's housing affordability index is expected to
rise from 113.0 in 2007 to 129.0 in 2008.

Growth in the U.S. gross domestic product (GDP) is projected at 2.2
percent in 2008 and 2.7 percent in 2009.  The unemployment rate should
rise to 5.4 percent in the second half of 2008 before averaging 5.2
percent in 2009.

Inflation, as measured by the Consumer Price Index, is seen at 2.7
percent this year and 1.4 percent in 2009.  Inflation-adjusted
disposable personal income is likely to grow 1.7 percent in 2008 and
3.5 percent next year.

The National Association of Realtors(R), "The Voice for Real Estate," is
America's largest trade association, representing more than 1.3
million members involved in all aspects of the residential and
commercial real estate industries.

# # #

*The Pending Home Sales Index is a leading indicator for the housing
sector, based on pending sales of existing homes. A sale is listed as
pending when the contract has been signed but the transaction has not
closed, though the sale usually is finalized within one or two months
of signing.

The index is based on a large national sample, typically representing
about 20 percent of transactions for existing-home sales.  In
developing the model for the index, it was demonstrated that the level
of monthly sales-contract activity from 2001 through 2004 parallels
the level of closed existing-home sales in the following two months.
There is a closer relationship between annual index changes (from the
same month a year earlier) and year-ago changes in sales performance
than with month-to-month comparisons.

An index of 100 is equal to the average level of contract activity
during 2001, which was the first year to be examined as well as the
first of five consecutive record years for existing-home sales.