Realty Times predicted that home sales would rise in the spring, due to the retraction of prices, mortgage interest rates, gas prices, and inventory, and it's good to be right so far, but there are still naysayers out there who believe that housing is headed further downhill.

Sales of existing homes rose in January, reaching the highest level of transactions in seven months, according to the National Association of Realtors®. Total existing-home sales -- including single-family, townhomes, condominiums and co-ops -- increased 3.0 percent to a seasonally adjusted annual rate of 6.46 million units in January from an upwardly revised pace of 6.27 million in December.

These sales were 4.3 percent below the 6.75 million-unit level in January 2006, which hardly heralds a housing boom, prompting David Lereah, the National Association of Realtors' chief economist, to say that observers shouldn't over-react to the sales gain, or to other short-term effects.

"Although we're expecting existing-home sales to gradually rise this year, and buyers are responding to the price correction, some unusually warm weather helped boost sales in January," he said. "On the flip side, the winter storms that disrupted so much of the country in February could negatively impact the housing market."

"Although the data is seasonally adjusted, these weather events are unusually large -- many transaction closings were postponed in February, and home shopping was essentially shut down for about a week in many areas," he said. "We shouldn't be surprised to see a near-term sales dip, but that will be followed by a continuing recovery in home sales."

Total housing inventory levels rose 2.9 percent at the end of January to 3.55 million existing homes available for sale, which represents a 6.6-month supply at the current sales pace -- unchanged from the revised December level. Supplies peaked at 7.4 months in October.

"Inventories are looking better, but price softness should continue until spring when the market is expected to become more balanced," Lereah said.

The national median existing-home price for all housing types was $210,600 in January, down 3.1 percent from January 2006 when the median was $217,400.

NAR President Pat V. Combs, from Grand Rapids, Mich., and vice president of Coldwell Banker-AJS-Schmidt, said a broader view shows the housing market stabilizing. "The market is trending up from its low last fall, and that is important in restoring confidence to buyers who've been on the sidelines," said Combs. "Since buyers can find more favorable terms, and they are looking for a place to call home for some years to come, getting into the market now make sense because it's a choice many didn't have during the boom period of bidding wars in much of the country."

In California, home sales decreased 12.6 percent in January, but the median price of an existing home increased 1.9 percent, said the California Association of Realtors.

The median price of an existing, single-family detached home in California during January 2007 was $559,640, a 1.9 percent increase over the revised $549,460 median for January 2006, C.A.R. reported. The January 2007 median price decreased 1.7 percent compared with December's revised $569,560 median price.

"The unsold inventory of existing homes jumped to 9.1 months in January, after hovering around the long-run average of 7 months since mid-2006," said C.A.R. Vice President and Chief Economist Leslie Appleton-Young. "There was a slight increase in statewide listings last month, which is characteristic of the start of the year. However, listings remained near the long-run average. As such, the increase in the unsold inventory index--the ratio of listings to sales--was driven primarily by the sales decline."

Rising inventories in California doesn't bode well for the rest of the country -- one in nine households is in California.

Other clouds are darkening the horizon, too.

Former U.S. Federal Reserve Chairman Alan Greenspan made the news recently by warning that the economy might slip into recession by the end of 2007 or 2008, which doesn't make anyone want to run out and buy a house.

While he hesitated to make a forecast that far into the future, his reasoning is the cyclical nature of expansions and recessions. The U.S. economy has been expanding since 2001, and is showing signs of coasting and might cycle to a close.

Speaking via satellite from the VeryGC Global Business Insights 2007 Conference in Hong Kong, Greenspan said, "We are now well into the contraction period and so far we have not had any major, significant spillover effects on the American economy from the contraction in housing."

But that's if housing doesn't get any worse.

Meanwhile rising delinquencies and foreclosure rates have captured the attention of Congress which held a hearing a few weeks ago to look into mortgage banking practices to determine whether lending guidelines need to be strengthened.

Freddie Mac, a government-sponsored mortgage purchaser which provides liquidity to mortgage lenders to loan more money, has responded by saying it would enforce new standards after September 1, 2007. The result will be an end to the party for some high-risk borrowers, as Freddie Mac will limit buying loans such as some no-income verification loans and those loans with "a high likelihood of excessive payment shock and possible foreclosure." This will reduce liquidity for some lenders, and what the impact will be on the housing market remains to be seen.

Also impacting the U.S. is jobs. While unemployment is still low, a 7.8 percent slump in durable goods orders in January, (reported by the Commerce Department) helped to spark a stock market sell-off yesterday. Coupled with discouraging news from China, that its stock market suffered the worst one-day sell-off in a decade, U.S. stocks followed suit, with the DOW plunging 540 points by 3:00 eastern standard time. While the index recovered somewhat, it was the worst one-day point loss since Sept. 17, 2001, when the stock markets reopened after the terrorist attacks on September 11, 2001.

That can't make anyone feel safer to run out and buy a house either.

However, 2001 was also the first year of the record five-year run in housing, when values nationwide rose 50 percent for the period -- the greatest gain in housing prices in recently recorded history.

At least when your house loses value, it doesn't evaporate before your eyes like a stock index. You can still go inside and shut the door.

Published: February 28, 2007

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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. For more articles by Blanche, click here.