The National Association of Realtors' Pending Home Sales Index, which measures homes under contract that have not closed, was flat in January, compared to December, at 85.9. The Realtors group, which reported the January index this morning (March 6), saw this as an indication that the housing market is stabilizing.

"This additional sign of a stabilizing market is encouraging, and our members are telling us there¹s been a pickup in shopping activity," said Lawrence Yun, the NAR's chief economist. "The higher loan limits for both FHA and conventional loans will increase consumer choice and provide greater access to lower interest rate mortgages in high-cost regions," he added. "Therefore, a notable rise in home sales can be anticipated in the second half of the year."

The index remains 19.6% below its level of January, 2007 however.

Strong gains in the West offset declines in the Northeast and South. The PHSI in the West rose 13% percent in January to 93.8, 12.7% below a year ago; in the Midwest, it rose 0.6% to 85.2, 13.3% lower than January 2007; in the Northeast, it declined 4.1% in January to 69.6, 28% below a year ago; and in the South, it fell 6.1% in January to 89.5, 23.8% below January 2007.

Based on the index, a leading indicator of actual home closings, the NAR is now estimating that existing-home sales will remain flat around an annual level of 4.9 million during the first half of 2008 before improving to a 5.8-million pace in the second half. That would put the annual rate for 2008 at 5.38 million. The NAR sees sales rising 3.5% to 5.60 million in 2009.

The NAR is projecting a decline of 1.2% in the aggregate existing-home price to a median of $216,300 this year, with a 3.5% gain to $223,800 in 2009.

The Realtors now say new-home sales will decline 23.7% to 590,000 this year and rise 7.2% to 633,000 in 2009. They see the median new-home price falling 6.1% to $232,200 this year before rising 5.1% in 2009.

The NAR is expecting builders to continue pulling back, with housing starts, including multifamily units, projected to fall 25.1% to 1.01 million this year and another 2.7% to 987,000 in 2009. "As builders sharply cut back production, vacant new-home inventory has consistently declined over the past year-and-a-half," Yun said. "That will permit a quicker return to balanced market conditions in many local areas."