RE/MAX Classic Group and the National Association of Realtors report there will be a recovery in the latter part of 2008

A downswing in home sales and building should bottom out sometime during the middle of 2007 before recovering in the latter part of 2008, a home-building industry economist said this week. In the meantime, said another economist, consumers shouldn’t expect a "widespread" bust in home prices as some of the strength begins to dwindle from regional housing markets. The National Association of Home Builders’ David Seiders and the Federal Deposit Insurance Corporation’s Richard Brown were among four economists testifying Wednesday before two Senate Banking subcommittees’ hearing about the housing bubble and its implications for the U.S. economy.

All four — including analysts from the National Association of Realtors and the Office of Federal Housing Enterprise Oversight — agreed housing activity is slowing. Economists added the slowdown poses some risks to the U.S. economy but that a drop-off in activity isn’t nationwide.

Seiders said a "below-trend" performance for home sales and building is likely over the next two years. Brown, meanwhile, told senators that historically, widespread price busts haven’t necessarily followed price booms. But, he cautioned, today there are more boom markets than in the past, and more consumers who have borrowed using "nontraditional" mortgage products, like interest-only loans.

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