Although housing cannot sustain its current pace, not even a prolonged war with Iraq will put much of a dent in the market, the chief economist of the National Association of Realtors maintains.

At worst, a long, drawn-out war in the Middle East would have the same impact as a 150-basis-point increase in mortgage rates and still leave the housing industry in fairly good shape, David Lereah said at the 840,000-member organization's annual convention recently.

A lengthy battle will bring sales down to the 5.1 million unit a year level, Lereah offered. "That's still a pretty healthy housing environment," he noted.

On the other hand, a short-lived fight like the Gulf War conflict a decade ago would cause only a brief dip in the market, the NAR economist ventured.

"Some people" will postpone buying, "but they will come right back" once the fighting is over, he said. "A war is so anticipated that there won't be the shock factor that there was during the Gulf War."

Absent any conflict, Lereah, who was chief economist at the Mortgage Bankers Association for several years in the mid-1990s, is predicting that mortgage rates will rise next year as the economy finally begins to pick up some steam.

He is forecasting that the economy will "recover fully" by next year's third quarter, and that loan rates will rise only "modestly" to an average of 6.8 percent for the year. And as a result, he said, existing home sales should slide but only marginally to 5.27 million units.

Even at that, though, the NAR economist said 2003 will go down as the third best year ever for resales.

When they final tally is taken for 2002, NAR expects sales to total a record 5.47 million units, a 3.4 percent increase from 2001.

Lereah believes new home sales should top out at an all-time high this year, too. His forecast is for an increase of 4 percent to a record 945,000 units in 2002, then an easing to 921,000 next year but still the second-best ever.

The slight cooling should take some of the pressure off prices, at least in the existing home market, he also said.

At the same time, appreciation will slow from 6.4 percent this year to 4.2 percent next year for resales, he predicted. But new home prices should continue to accelerate at the same 4.8 percent pace.

Overall, though, the NAR economist said that while housing will remain "very healthy," it will not be contributing as much to the economy has it has the last two years.

While housing will continue to sustain the economy with an underlying base of activity, he said, business spending and increases in manufacturing and other sectors will be necessary to grow the economy.