The National Association of Realtors expects soft market conditions to continue across much of the country but there's also plenty of reason to be hopeful that homebuying will pick up again by mid-year if not sooner.

The latest pending sales index, based on contracts signed in December slipped 1.5 percent from November, and was 24.2 percent below December's pending sales in 2006.

That has NAR economist Lawrence Yun seeing a pattern of "skimming along the bottom of the cycle" where sales could ease further, but "modestly."

Why? Buying conditions have improved.

Mortgage interest rates have dropped to near record-low levels and held under six percent almost the entire month of January and into February, which should put pending sales for January back into positive territory.

Also, Federal Housing Administration (FHA) and the Fannie Mae and Freddie Mac (GSE) loan limits have been temporarily increased, which will allow hundreds of thousands of borrowers to get into conventional loans.

But Yun still raises the caution flag.

Household formation, the most critical number to impact housing units, was half what it should have been in 2007, which indicates pent-up demand for homebuying.

What's unknown, is how much longer renters, 40 percent of first-time homebuyers, will stay in their apartments, or how many grown children will remain in their parents' basements.

If mortgage interest rates remain below 6 percent as the NAR expects them to for the remainder of 2008, then home sales should improve by the second half of the year.

But a lot of that depends on lenders. If their reluctance to loan can be offset by higher conventional loan limits which takes the risk out of the equation for banks, then housing should improve.

Another X factor is what people will do with their economic stimulus checks. Will they pay down debt, save their money, or add it to their downpayment on a new home?

We'll know more soon. Watch Realty Times daily for real-time mortgage interest rates.

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Published: February 11, 2008

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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.