Further, the NAR expects existing-home sales to remain flat at about an annual level of 4.9 million in 1H 2008 before improving to a 5.8-million pace in 2H 2008. Assuming a weak first half, total sales for 2008 are projected at 5.38 million, but are then seen rising 3.5% to 5.60 million in 2009, the NAR said.

In addition, the aggregate existing-home price is projected to decline 1.2% to a median of $216,300 in 2008, and then increase 3.5% to $223,800 in 2009.

Meanwhile, the NAR expects new-home sales to decline 23.7% to 590,000 this year before rising 7.2% to 633,000 in 2009. Housing starts, including multifamily units, will probably fall 25.1% to 1.01 million this year, and then continue to slip another 2.7% to 987,000 in 2009.

Economic Analysis: A surprisingly tame January 2008 pending homes sales report, but the telling data here is the rather optimistic -- and unrealistic -- NAR predictions regarding the 2009 housing market. In 2009 the NAR expects existing home sales to increase 3.5% and new home sales to increase 7.2% -- goals unlikely to be achieved given the high level of home inventories nationally. Further, the NAR's 2009 existing/new home sales forecasts look all the more problematic when one notes that the NAR also expects the U.S. economy to grow 1.5% in 2008 before accelerating to 2.4% in 2009: a 1.5% 2008 GDP growth level would not be high enough to give the economy the tailwind needed to generate the 2009 existing/new home sales the NAR expects.

With the above as a backdrop, the NAR's projection that the aggregate existing home price will rise in 2009 to $223,800 also has to be viewed as an optimistic forecast.