U.S. home sales and prices will fall further in 2007 than earlier expected, the leading realty trade association predicted Wednesday.
The National Association of Realtors trimmed its sales forecast for the fifth straight month and also widened its predicted drop in existing home values.
"We continue to get dismal earnings forecast from builders, most recently D.R. Horton and Ryland," reported CNBC's Diana Olick. "Cancellation rates for both these companies are still very high."
Existing-home sales are seen at 6.11 million units this year, down from the 6.18 million units it predicted last month.
Sales in 2007 will be the lowest since 2002 when 5.63 million existing homes were sold. Even with the decline, this year would rank as the fifth highest on record, the trade group said.
The national median sales price for existing homes should ease by 1.4 percent to $218,800 this year. Last month the trade group said prices should slip 1.3 percent.
Today's housing market favors home buyers with a large inventory and soft prices, said Lawrence Yun, the trade group's senior economist.
"Buyers now have an overwhelming advantage given the wide selection of homes available in many markets," he said.
The trade group said it expects the housing market to strengthen next year with an increase in sales and home values.
Existing-home prices should rise 1.8 percent in 2008 while sales should be up 4 percent to 6.37 million units.
New-home sales and prices also are expected to fall this year and then get a bounce in 2008, NAR said in its monthly economic outlook.
New single-family home sales should drop to 865,000 this year from the 1.05 million sales in 2006 and then hit 878,000 next year. The median new-home price should decline 2.6 percent this year and rise 2.2 percent in 2008.
Housing starts, including multifamily units, are forecast at 1.43 million units this year and 1.44 million in 2008, down from 1.80 million last year, the group said.