The National Association of Realtors Tuesday released its May forecast, and it is calling for a 2.9% drop in existing home sales, a 17.8% decline in new single-family home sales and the first drop in the median price of existing homes since it began keeping records in the 1960s.

The good news is that NAR also is forecasting 2.1% growth in real gross domestic product, an anemic number compared to 3.3% and 3.2% in the two previous years but still well into positive territory. It also is projecting 1.3% growth in nonfarm payrolls and only a 2.5% jump in consumer prices, which, if correct, should keep the Federal Reserve in check regarding interest rate increases. NAR pegged the rate on a 30-year, fixed-rate mortgage at 6.4% for the year.

On a quarterly basis, NAR sees existing home sales deteriorating in the second (-6.6%) and third (-1.0%) quarters but then predicts a turnaround to 1.3% growth in the fourth. It forecasts the slump in new home sales to continue through 2007, with sales down 21.5% in the second quarter, 14.1% in the third and 12.1% in the fourth. New home prices will hold even with 2006 at a median of $246,400, while existing home prices will fall 1% to $219,800.SEE FORECAST HERE

The NAR also sees housing starts falling 19% to 1,458,000 in 2007, then gaining 4.5% in 2008. It is predicting gains of 3.8%, 6.1% and 10.5% in the first three quarters, respectively, of 2008.