Housing Slump to Drag Home Prices Down This Year

Chicago–The housing decline will continue to decrease home prices in 2008, according to the Chicago-based National Association of Realtors’ (NAR) monthly forecast, released Thursday.Pre-existing home prices will decline by 1.2 percent this year; just a month ago, NAR predicted the market would improve halfway through 2008 and said prices would remain steady, CNNMoney.com reports.After projecting a record first quarter 5.3 percent drop, NAR now says home prices will fall 6.1 percent in the first quarter. Less pre-existing homes will be sold this year, according to the group, which predicts sales will decrease by 4.8 percent. In 2007, existing home sales plummeted by 12.8 percent, according to NAR data. The monthly report indicates that new home sales could have an even harder year. NAR estimates suggest median new home prices will fall 4.3 percent and sales will tumble 17.7 percent.The group’s Pending Home Sales Index for December, also released Thursday, showed a declining demand for new homes–NAR research found the amount of homes under contract fell again to the second-lowest level on record.However, despite a weakening housing sector, the real estate group says the U.S. economy will avoid a recession.”We’re seeing a pattern that is consistent with skimming along the bottom of the cycle, and sales could ease modestly,” said Lawrence Yun, the group’s chief economist.