Economists at the National Association of Realtors are a little more optimistic than David Seiders of the National Association of Home Builders. According to NAR's senior economist Lawrence Yun, a "good' buyers market has evolved. Does that mean that consumers are actually buying something?

Other indicators are more uncertain. Take retail. Stores across the country reported slow traffic in June until they started slashing prices, prompting the International Council of Shopping Centers to forecast that stores open longer than one year will show an increase in sales of 1.5 to 2 percent. That wouldn't be so bad but sales were also slow in May. Both Sears and Home Depot blame the housing market. People either aren't in the mood or don't have the money.

The builders say folks are still cancelling contracts to build, and that the market won't improve until 2008. Even so, they're going to put more than a million houses on the ground for 2007.

But the NAR thinks home sales will pick up sooner than 2008.

“Buyers now have an overwhelming advantage given the wide selection of homes available in many markets,” says Yun. "But with profit margins coming under pressure, homebuilders will limit new construction well into 2008. This should help the overall inventory level to move steadily into a more balanced state.”

Yun, the House Whisperer.

When sellers become Calm and Submissive, buyers can be Calm and Assertive.

The state-of-mind training may already be working. According to the Mortgage Bankers Association, loan volumes were up 1.1 percent last week on a seasonally adjusted basis from the previous week. before. Refis fell further, down 3 percent from the last week of June. Home purchase applications were up, while the refinance share of applications decreased to 36.2 percent from 37.8 percent the previous week, and the adjustable-rate mortgage (ARM) share dropped from a 21 percent share to 20.4 percent. Rising interest rates might have galvanized some buyers, as rates went from 6.5 percent to 6.65 percent for the benchmark 30-year fixed rate.

That said, existing-home sales are expected to total 6.11 million this year and move up to about 6.37 million units in 2008. Both years are still down from 6.48 million in 2006, but that's what makes opportunity for buyers. New-home sales are projected at 865,000 in 2007 and 878,000 next year, compared with 1.05 million in 2006. Housing starts, including multifamily units, are forecast at 1.43 million units this year and 1.44 million in 2008, down from 1.80 million last year.

Despite slower sales, prices aren't going down in the aggregate. Expect existing-home prices are likely to rise 1.8 percent to a median of $$245,400 in 2008 after a 1.4 percent decline this year to $218,800. The median new-home price should rise 2.2 percent to $222,700 next year following a 2.6 percent drop in 2007 to $240,100.

Yun advises, “Markets that sharply reduce new construction in 2007 will generally experience respectable price increases in 2008. Local conditions vary considerably, but with historically low mortgage interest rates this summer and sustained job gains, it could be a good time for first-time buyers with a long-term view to test the housing waters.”

Overall, forecasts the NAR, growth in the U.S. gross domestic product (GDP) should be 2.0 percent in 2007, well below inflation numbers that cause the Federal Reserve to raise short-term interest rates. That's compared with a 3.3 percent growth rate last year; GDP is forecast to grow 2.8 percent in 2008. he unemployment rate is likely to average 4.6 percent in 2007, unchanged from last year. Inflation, as measured by the Consumer Price Index, is projected at 2.6 percent in 2007, down from 3.2 percent last year. Inflation-adjusted disposable personal income should rise 3.0 percent this year, up from a 2.6 percent gain in 2006.

So tepid economic growth and productivity numbers (that's when earnings outpace or underperform wages) should stabilize mortgage interest rates for the rest of the year. Earlier this month, interest rates had spiked to nearly 7 percent, spooking homebuyers and bringing refinancings to a halt. Smoother mortgage interest rates are encouraging homebuyers and refinancing ARM holders to call their lenders. The 30-year fixed-rate mortgage is estimated to average 6.7 percent during the second half of this year, and fluctuate around 6.6 percent in 2008.