According to the latest analysis by the National Association of Realtors, widening credit availability will help turn home sales around. Foreclosures appear to be waning, allowing housing forecasters a breather from bad news.

Conditions in the mortgage market are improving for consumers, which should help to release some pent-up demand in early 2008, says Lawrence Yun, NAR senior economist. "Conforming loans are abundantly available at historically favorable mortgage rates. Pricing has steadily improved on jumbo mortgages since the August credit crunch, and FHA loans are replacing subprime mortgages," he explains.

RealtyTrac reported its foreclosure numbers for September with good news for the first time in months. While the 223,538 number seems shockingly high -- one foreclosure for every 557 households, its down eight percent from August when foreclosures hit a multi-month high. While some anticipate more waves of foreclosures, others predict that the worst is over. By 2006, many of the lenders who had so enthusiastically made subprime loans with adjustable rate mortgages in 2004 and 2005 were beginning to scale back. By summer 2007, the mortgage market was in a crisis, with most lenders backing away from making any but conventional loans.

Although a week can't make a forecast, the Mortgage Bankers Association reported mortgage loan activity increasing 2.4 percent over the previous week.

Treasury Secretary Henry Paulson announced the formation of a mortgage industry coalition composed of at least 11 of the largest mortgage lenders, with about 60 percent market share, to help homeowners with their at-risk loans. What form this help will take remains to be seen, but the impact for homeowners is that help, deserved or undeserved, is on the way.

The bottom line is that housing simply isn't in the trough that the national media says it is.

When the media quotes dire figures, it's invariably the recessing boom areas -- California, Las Vegas and Florida. Other quotables are the Case-Shiller index, a tracking of 10 or 20 major cities, that is undeservedly reputed to be the most accurate accounting of home sales. What the media invariably fails to report is that the index is tied to a hedge fund that's hardly objective.

Editor's note: “1) Case-Shiller indexes are available for many more than 20 cities (the set of 20 is a subset that is available to the public), and there is a national index (also available to the public). 2) The CSIs do not measure home sales. They measure (accurately) changes in capital value of single family housing stock through time (references upon request). 3) The index is not tied to a hedge fund, is completely objective, and has the most thorough safeguards in place to ensure that objectivity is never compromised., " write Terry Loebs, Managing Director, MacroMarkets LLC.

"Standard & Poor's and its partners on this index (Fiserve & MacroMarkets) take great care in ensuring that all home sales are included in our index. In fact, the coverage of our U.S. National index represents home prices from all 9 U.S. Census Divisions, drawing from over 100 of the largest metropolitan areas and almost 500 counties. We have estimated that over 70% of the nation’s housing stock value is reflected in the U.S. National index. Not sure too many other indices can boast that type of coverage. More importantly, I would like to request that you issue a correction concerning your statement that our indices are tied to a hedge fund. This is simply untrue, factually misleading and extremely concerning. In fact, I am very interested in learning the source of this erroneous information as well as how the information was verified before publishing. I would suggest that sometime in the near future, you visit our web site: www.homeprice.standardandpoors.com to learn more about the index, and why so many in the industry have come to embrace it as the leading indicator of home price trends in the U.S. If this site fails to answer any questions you may still have, please feel free to contact me directly. Either myself or an S&P analyst will be more than happy to assist you with any concerns. I look forward to your response."

David R. Guarino, Communications Manager, Spokesperson Indices, Hedge Funds & Mutual Funds, Standard & Poor's

"Although sales are off from an unsustainable peak in 2005, there is a historically high level of home sales taking place this year -- a lot of people are, in fact, buying homes," says Yun. "One out of 16 American households is buying a home this year. The speculative excesses have been removed from the market and home sales are returning to fundamentally healthy levels, while prices remain near record highs, reflecting favorable mortgage rates and positive job gains."

In fact, some areas are booming. "Markets like Austin, Salt Lake City and Raleigh have been outperforming recently and will continue to do well next year," Yun said. "Other areas like Denver and Wichita will likely move up in the price growth rankings due to very positive local economic developments."

NAR forecasts:

• that 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.

• 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.

• the 30-year fixed-rate mortgage is expected to average 6.4 percent for the next two quarters and then edge up to the 6.6 percent range in the second half 2008. Additional cuts expected in the Fed funds rate will help to keep mortgage interest rates historically favorable.

• growth in the U.S. gross domestic product (GDP) is estimated at 2.0 percent this year, below the 2.9 percent growth rate in 2006; GDP is likely to grow 2.7 percent in 2008.

• the unemployment rate is forecast to average 4.6 percent this year, unchanged from 2006.

Only a little inflation will rock the boat, says NAR. Inflation, as measured by the Consumer Price Index, is expected to be 2.8 percent in 2007, compared with 3.2 percent last year. Inflation-adjusted disposable personal income will probably increase 3.6 percent in 2007, up from 3.1 percent last year, says NAR.

Existing-home sales are expected to total 5.78 million in 2007 and then rise to 6.12 million in 2008, which is still down from 6.48 million in 2006, but Yun says let's put that in perspective.

The year 2007 will be the fifth highest on record for existing-home sales. That's hardly a housing meltdown.