It's no surprise, but the Mortgage Bankers Association says the housing slump will extend to the third quarter of next year and possibly into 2009, says Doug Duncan, the trade association's chief economist. Maybe it's a good thing that any forecast includes a bottom.

He says that existing home sales for 2007 will be about 5.72 million units for a 12 percent decline from 2006, and that existing home sales will slump 10 percent further before they pick up by five percent in 2009.

New home sales will be down 22 percent from 2006 to a total of 819,000 units and will soften 10 percent further in 2008. Things look brighter in 2009 with an expected rise in sales of six percent.

For the first time national median home prices will decline two percent in successive years in 2007 and 2008 before going flat in 2009.

On the bright side, Duncan doesn't expect mortgage interest rates to go up much higher. A conforming 30-year loan today is about 6.4 percent and will climb to 6.6 percent by early 2008.

It's a large "overhang" of inventory, coupled with tighter lending standards that are the cause of the continuing slump, he says.

To the rescue, the National Association of Home Builders Chief Economist David Seiders says that new home construction is at a 14-year low.

"While there's no question that the housing downswing continues to be played out in markets across the country, today's numbers show that builders are pulling back on production until sales improve," says Seiders, "This is exactly what our latest builder surveys have told us. We do expect some additional downward movement in housing production going into next year, at which point starts should begin to stabilize as sales turn upward in the second quarter."

According to the U.S. Census housing starts in September were at a seasonally adjusted rate of 1,191,000 annually, over 10 percent below the revised August estimate of 1,327,000 and 30.8 percent below September 2006.

New home completions are 31.1 percent below September 2006 at 1,391,000, including multi-family units.

Consequently, the builders' confidence index reached an all-time low of 18, meaning one in six builders feels conditions are favorable.

While the National Association of Realtors forecasts similar slow rises in mortgage interest rates to the MBAA, the trade organization is more optimistic about home prices.

Existing-home prices will probably slip 1.3 percent to a median of $219,000 in 2007 before rising 1.3 percent next year to $221,800, while the median new-home price should drop 2.1 percent to $241,400 this year, and then increase 1.0 percent in 2008 to $243,900.

Published: October 18, 2007

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Blanche Evans is the award-winning senior editor of Realty Times, the Internet's leading independent real estate news service. She is featured daily on the Realty Times Video Network in the "Realty Viewpoint" segment. Blanche has been named one of the "25 Most Influential People In Real Estate" by REALTOR Magazine, and has been twice recognized as a "notable." In 2005, she was named "Top Reporter Covering the NAR" by Delahaye-Bacon's. Blanche is a renowned author of five real estate books. Her newest, Bubbles, Booms and Busts: Make Money In Any Real Estate Market, McGraw-Hill, was rave-reviewed by The New York Times. She was also selected from hundreds of real estate experts to contribute to Donald Trump's book, Trump: The Best Real Estate Advice I Ever Received: 100 Top Experts Share Their Strategies, Rutledge Hill Press, and is featured on page 68. Order Now Review - Honors In 2006, Blanche was selected among scores of candidates to author two consumer real estate guidebooks for the National Association of Realtors: The NAR Guide to Home Buying, and The NAR Guide to Home Selling, Wiley & Sons. She is currently planning two new books for the NAR and its members.       Known for her keen insight into real estate industry issues and for her ability to make complex subjects easy to understand, Blanche is a sought-after keynote and continuing education speaker. Real estate organizations from MLSs, to brokerages, to franchisors, to associations hire her to provide up-to-the-minute analysis of real estate industry news and advice on how to improve revenues. Her passionate delivery, peppered with stinging wit, is a huge hit with audiences and fans. Don Klein, CEO Greater Nashville Association of Realtors, Blanche Evans, Richard Courtney, president 2007, GRAR "The GNAR membership meeting last week featured Blanche Evans as the keynote speaker. Her comments and insights resonated extremely well with those in attendance and we have had many requests for copies of her PowerPoint Presentation. She was a terrific part of the membership meeting and convention program!" - Don Klein, CEO Greater Nashville Association of Realtors Coverage from WSMV, Nashville - 8-14-2007 That Interview Guy - Get Inside The Head Of Today's Generation 2007 AE Institute Session - To purchase 2006 AE Institute Session - Parts 1 2 3 4 5 6 7 8 9 HouseValues Mastermind call - Parts 1 2 Blanche's fireside chat with Jeremy Conaway, HAR - Click here. To contact Blanche, email her at . For more articles by Blanche, click here.