Two signs are positive that the housing slump may be coming to an end. First, the National Association of Realtors says it's going to get worse, but not by much, and the Mortgage Bankers Association says mortgage applications are up for the week. When NAR says there's pent-up buyer demand, the quickly rising mortgage apps tend to support that idea. And where there's pent-up demand, the housing market can turn on a dime.

The housing market will probably hold close to present levels in the months ahead, according to the latest forecast by the National Association of Realtors.

Lawrence Yun, NAR senior economist, said he isn't looking for any notable changes in sales activity, even though the NAR predicts further decreases of one percent, or 70,000 homes.

"Existing-home sales should be relatively stable over the next few months, holding in a modest range, with some pent-up demand growing from buyers who've been on the sidelines," he said. "Mortgage disruptions will hold back sales over the short term, but long-term fundamentals are favorable. A modest upturn is projected for existing-home sales toward the end of the year, with broader improvement to include the new-home market by the middle of 2008."

It's unclear whether or not the NAR took into account some recent news by the MBA, that mortgage applications and refinancings took a sudden surge upward, based on lower interest rates. Cheaper gas might have also had an impact, but the upshot is that buyers are willing to act quickly on good news, and that supports NAR's statement that pent-up demand does indeed exist.

Existing-home sales are forecast at 6.04 million in 2007 and 6.38 million next year, below the 6.48 million recorded in 2006. New-home sales are expected to total 852,000 this year and 848,000 in 2008, down from 1.05 million in 2006. Housing starts, including multifamily units, are likely to total 1.43 million in 2007 and 1.40 million next year, again below the 1.80 million units started in 2006.

But Yun says that demand isn't going away. With a growing population, housing will still be needed.

"With the population growing, the demand for homes isn't going away -- it's just being delayed," Yun said. "More buyers, and cutbacks in new construction, will eventually draw down the inventory levels and support future price appreciation, but general gains will be modest next year. Serious buyers today have a long-term view of housing as an investment -- speculators have left the market."

Even so, existing-home prices should ease by 1.2 percent to a median of $219,300 in 2007 before rising 2.0 percent in 2007 to $223,600. The median new-home price will probably fall 2.3 percent to $240,800 in 2007, and then rise 2.3 percent next year to $246,300.

What buyers should note is that the 30-year fixed-rate mortgage is forecast by NAR to average 6.7 percent in the fourth quarter and then ease to the 6.5 percent range next year.

Mortgage interest rates are below next year's levels right now. The MBA says borrowing costs on 30-year fixed-rate mortgages, excluding fees, averaged 6.41 percent, down 0.09 percentage point from last week. Interest rates today are below year-ago levels at 6.45 percent, and below projections for fall 2007.

But there's a catch. Can buyers close?

David Reed, author of Mortgages 101, now in its second printing, says that he's seeing lenders back away from loans they've already approved.

If you are an agent with a buyer applying for an Alt-A or subprime loan, you might want to step up the closing.

"Mortgage lenders don't have a vault full of money to make a loan," explains Reed. "They have a credit line they use to fund the mortgage but then sell that loan to replenish their funding ability. If the lender can no longer find a buyer for the loan they just closed (as in mortgage-backed securities,) they have no more money to make new loans. They then have to close their doors."

That's what's happening with many lenders, and it may continue until things "shake out," as Reed says. One in three loans is nonconforming, and that's where the credit crunches the most.

Published: August 9, 2007

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Blanche Evans is the award-winning senior editor of Realty Times, the Internet's leading independent real estate news service. She is featured daily on the Realty Times Video Network in the "Realty Viewpoint" segment. Blanche has been named one of the "25 Most Influential People In Real Estate" by REALTOR Magazine, and has been twice recognized as a "notable." In 2005, she was named "Top Reporter Covering the NAR" by Delahaye-Bacon's. Blanche is a renowned author of five real estate books. Her newest, Bubbles, Booms and Busts: Make Money In Any Real Estate Market, McGraw-Hill, was rave-reviewed by The New York Times. She was also selected from hundreds of real estate experts to contribute to Donald Trump's book, Trump: The Best Real Estate Advice I Ever Received: 100 Top Experts Share Their Strategies, Rutledge Hill Press, and is featured on page 68. Order Now Review - Honors In 2006, Blanche was selected among scores of candidates to author two consumer real estate guidebooks for the National Association of Realtors: The NAR Guide to Home Buying, and The NAR Guide to Home Selling, Wiley & Sons. She is currently planning two new books for the NAR and its members.       Known for her keen insight into real estate industry issues and for her ability to make complex subjects easy to understand, Blanche is a sought-after keynote and continuing education speaker. Real estate organizations from MLSs, to brokerages, to franchisors, to associations hire her to provide up-to-the-minute analysis of real estate industry news and advice on how to improve revenues. Her passionate delivery, peppered with stinging wit, is a huge hit with audiences and fans. Don Klein, CEO Greater Nashville Association of Realtors, Blanche Evans, Richard Courtney, president 2007, GRAR "The GNAR membership meeting last week featured Blanche Evans as the keynote speaker. Her comments and insights resonated extremely well with those in attendance and we have had many requests for copies of her PowerPoint Presentation. She was a terrific part of the membership meeting and convention program!" - Don Klein, CEO Greater Nashville Association of Realtors Coverage from WSMV, Nashville - 8-14-2007 That Interview Guy - Get Inside The Head Of Today's Generation 2007 AE Institute Session - To purchase 2006 AE Institute Session - Parts 1 2 3 4 5 6 7 8 9 HouseValues Mastermind call - Parts 1 2 Blanche's fireside chat with Jeremy Conaway, HAR - Click here. To contact Blanche, email her at . For more articles by Blanche, click here.