updated 10/10/2007 11:41:01 AM ET 2007-10-10T15:41:01

This year’s decline in existing home sales will be steeper than previously anticipated, a trade group for real estate agents predicted Wednesday.

The eighth straight downwardly revised forecast from the National Association of Realtors calls for U.S. existing home sales to be 10.8 percent below last year as housing market woes persist. Sales of new homes, meanwhile, are expected to finish 2007 at the lowest level in a decade.

The trade group’s outlook for 2007 homes sales has grown more pessimistic through the year as foreclosures soared, credit market troubles developed and sales fell. Back in February, the group forecast an annual decline in existing home sales of only 0.6 percent.

In its October report, the association predicts 5.78 million existing homes will be sold in 2007, down from 6.48 million last year. Last month, the association predicted an 8.6 percent drop from a year ago.

This year’s sales would be the lowest since 2002, when sales hit 5.63 million.

Sale prices for existing homes are forecast to drop 1.3 percent to a median of $210,200 this year — a slight improvement from last month’s prediction of a 1.7 percent decline. The median price refers to the point where half sold for more and half for less.

Next year, the trade group expects existing home sales to climb to 6.12 million. That is 2.4 percent lower than last month’s prediction.

New home sales are projected to fall to 805,000 this year down 23 percent from 1.05 million last year. If that forecast is accurate, it would be the worst year since 1997, when 804,000 newly constructed homes were sold. In 2008, 752,000 new home sales are expected.

Despite the bleaker outlook, the group maintains an optimistic message. Its senior economist, Lawrence Yun, noted in a statement that markets including Austin, Texas, Salt Lake City and Raleigh N.C. are showing price growth and 2007’s home sales will be the fifth-highest on record.

“The speculative excesses have been removed from the market and home sales are returning to fundamentally healthy levels, while prices remain near record highs, reflecting favorable mortgage rates and positive job gains,” Yun said.

Existing single-family home sales dropped 4.3 percent in August, compared with the previous month, to the slowest sales pace in five years, according to the Realtors group.

The housing market has been battered by the steepest downturn in 16 years, as measured by the Standard & Poors/Case-Shiller index that covers housing prices in major U.S. cities. Problems were exacerbated in August by turmoil in credit markets, reflecting new worries about rising mortgage defaults.

The median U.S. existing home price edged up slightly in August to $224,500, an increase of 0.2 percent from August 2006. It marked the first year-over-year price increase after a record 12 straight months of declining prices.

Copyright 2007 The Associated Press. All rights reserved. This material may not be published, broadcast, rewritten or redistributed.

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