The National Association of Realtors this morning (April 8) reported its Pending Home Sales Index, based on contracts signed in February, fell 1.9% percent to 84.6 from an upwardly revised reading of 86.2 in January. The index was 21.4% below February 2007's index of 107.6. The 84.6 reading was the lowest level since the index was created in 2001.

"The slip in pending home sales implies we're not out of the woods yet, though an era of successive deep sales declines appears to be over," said Lawrence Yun, NAR chief economist.

The February PHSI in the Northeast rose 3.2% to 71.8, still 25.4% below a year ago. Declines were posted in the other three regions, with the Midwest down 3.7% to 82.7, 17.4% below February 2007, the South down 5.5%, off 30.3% year over year, and the West down 9.8% to 84.6, 17.1% below last February.

The NAR now expects existing-home sales for all of 2008 to total 5.39 million, down 4.6% from 5.65 million in 2007. The NAR is projecting an increase of 6.6 % to 5.74 million in 2009. The media price of existing homes is expected to fall 1.4 % to $215,800 for all of 2008 before rising 3.7% to $223,800 next year.

The Realtor group expects new-home sales to drop 25.7% to 576,000 in 2008 before rising 4.6% to 602,000 in 2008, with the median price falling 3.6% to $238,400 in 2008, then rising 4.0% next year to $247,800. The NAR puts housing starts, including multifamily units, down 26.3% to 999,000 this year and down another 0.5% to 994,000 in 2009.

"Exceptionally weak home sales related to jumbo loans problems will depress home prices in the first half of the year, but steady liquidity improvements in the conforming jumbo-loan market will help prices recover in the second half of the year," Yun said. "Some parts of the country that can expect improvement include the Northeastern region and the oil-patch states of Texas, Oklahoma, Louisiana and Arkansas," he said.

On a brighter note, NAR's housing affordability index is forecast to rise 14 percentage points to 127.0 in 2008.