The National Association of Realtors held their annual convention in New Orleans this year and with that came a series of press releases, most notable was their housing forecast about future prices and sales volume [CNN/Money].

* Existing Home Sales - will fall 8.6% total in 2006 but will only fall 0.6% in 2007.
* New Home Sales - will fall 16.8% in 2006 and another 8.7% in 2007.
* Existing Home Median Sales Price - will increase 1.9% this year and 1.7% next year.
* New Home Median Sales Price - will drop 1.1% this year and increase 1.3% next year.
* Inventories will continue to expand.

On the other hand:

UBS analyst Margaret Whelan estimated that the industry overbuilt to the tune of 900,000 homes between 2003 and the first half of 2006.

"It will take about three years to shift all of that excess inventory," said Whelan. As a result, she expects housing starts to fall 15% in 2007 from 2006 levels.

Whelan said there is currently a five-month supply of existing homes up for sale and a six-month supply of new homes on the market, based on current sales trends.

In past cycles, when inventory levels have reached four or five-months' supply, "you've had a dropoff in real house prices," said UBS chief economist Maury Harris.

Harris is predicting median home prices will fall 10% over the next year, and housing starts will fall by 180,000 units to 1.55 million in 2007 from 2006. He trimmed projected GDP growth to 2% from 2.2%.

The UBS chief economist's predictions come with one strong "only-if". The housing market will see those results, only-if the Fed lowers the fed fund rate by 1.0%, by March.

Otherwise, the drop-off in sales will be worse.

Source: Edict From New Orleans: Keep The Housing Market Above Water - By Jonathan Miller, Matrix, quoting UBS sees home prices down 10% in 2007 - By Janet Morrissey, MarketWatch