The National Association of Realtors' Pending Home Sales Index, based on contracts signed in November, fell 2.6% to 87.6 from an upwardly revised 89.9 in October. The index is 19.2% below November 2006's 108.4.

The NAR, which said the index remains above the readings for August and September, said the market is still stablizing. "Although there could be some minor slippage in the first quarter, existing-home sales should hold in a narrow range before trending up," said Lawrence Yun, the NAR's chief economist.

Yun, however, indicated that a market turnaround may not occur until late 2008. To date, he had been projecting an uptick in sales earlier in the year.

"The exact timing and the strength of a home sales recovery is a bit uncertain," said Yun. "A meaningful recovery in existing-home sales could occur as early as this spring, or it may be further delayed toward late 2008."

Carl Reichardt of Wachovia Securities put out a note to investors that said, "While the sequential change in the index fell below consensus, the October figure was revised upwards by 3.1%. At 31.1% below the peak level set in April 2005, and only 2.5% above the August trough, the index remains depressed but has now been above the low for three consecutive months, perhaps suggesting some stabilization in resale activity. It is worth noting that since the index's inception in January 2001, there has been a correlation of .95 with one-month lagged existing home sales."

Regionally, the Pending Home Sales Index in the South rose 2.3% in November to 100.7, 19.8% below a year ago; in the West, it fell 2.1 percent to 86.6, 18.5% below November 2006; in the Midwest it dropped 4.1% to 82.1, 18.6% below a year ago; and in the Northeast it plunged 13.0% to 70.1 from a spike in October, 19.1% percent below November 2006.

The NAR also released its updated forecast for 2007 and 2008, which were largely unchanged from last month. The NAR expects 2007 existing-home sales to come in at 5.66 million, then move up to 5.70 million this year and 5.91 million in 2009, compared with 6.48 million in 2006. Existing-home prices for 2007 are likely to be down 1.9% to a median of $217,600, hold even this year and then rise 3.1% in 2009 to $224,400, the NAR said.

Its forecast for new home sales was less sunny. New-home sales are projected at 773,000 for 2007. The number is expcted to drop to 669,000 in 2008 before rising to 730,000 in 2009, well below the 1.05 million sold in 2006. The NAR expects the median new-home price to drop 2.1% to $241,400 for 2007, and then rise 0.4% to $242,200 this year and gain another 5.9% in 2009.

The NAR also offered some advice to the Federal Reserve Open Market Committee for its January meeting: Slash the overight funds rate by 75 basis points to 3.5%. Economists elsewhere are expecting the Fed to cut 25 basis points, with an increasing number betting on a 50-basis-point cut.

"Consumers are also looking to market-time interest rates, and the expectations of further rate cuts are pushing some home buyers to delay," said Yun. "Monetary policy will be much more effective with a one-time large cut, rather than a series of small cuts."