The National Association of Realtors (NAR) predicted on Monday, December 11, that sales of existing homes and condos would continue to fall in 2007.

Existing home sales will likely decline as much as 17.7 percent this year, and an additional 9.4 percent next year, according to the NAR.

However, the Association’s chief economist, David Lereah, is also forecasting a late-year recovery in 2007 home sales. He says that roughly 75% of the country will see a slow expansion of existing home sales by the end of next year, when compared with the fourth quarter of 2006.

Lereah added that “general gains in [home] value next year will be modest by historic standards.”

From July to September of this year, the rate of home price appreciation stood at 3.5 percent–a dramatic drop from the 12 percent rate the nation saw in the fourth quarter of 2005.

Lereah also predicted that 30-year mortgage rates would be up to 6.7 percent by September of 2007. Those rates were at 6.11 percent last week, according to mortgage finance company Freddie Mac.

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Freddie Mac’s weekly survey showed rates for the benchmark 30-year loan near its yearly low as of Thursday, December 13th.

Nationally, the 30-year fixed-rate loan averaged 6.12% for the week, up from 6.11% in the week prior. The mortgage’s low point was Jan. 19, when it hit 6.1%. At this time last year the loan averaged 6.3%.

15-year loans, popular with homeowners looking to refinance, rose from 5.84% to 5.86% . At this time last year the 15-year averaged 5.85%.

The 1-year Treasury-indexed adjustable rate went up from 5.43% to 5.45% (compared with 5.15% a year ago), while the 5-year hybrid ARM held steady at 5.92% (compared with 5.77% a year ago).

Reports of increased job growth and November retail sales that exceeded expectations were offset by weaker wage growth and lower consumer confidence in December. According to Freddie Mac chief economist Frank Nothaft, these mixed economic reports prevented any drastic changes in mortgage rates this week.

The Mortgage Bankers Association said Wednesday that applications for mortgages, particularly applications for refinancing, have increased in recent weeks due to mortgage rates’ stabilizing at comparatively low levels.

With rates remaining around their lowest levels for 2006, many borrowers who relied on exotic mortgages like subprime ARMS to purchase high-priced homes are now seeking safety in a fixed-rate loan, said Richard Powers, general manager of the online-mortgage lender Ditech.com.

However, borrowers are increasingly failing to keep up with their mortgage payments. According to the MBA, mortgage delinquencies spiked upward during the third quarter for all types of loans, but especially for subprime ARMs.

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Although condo prices across the midwest fell in the third quarter of 2006, median condo prices in Chicago actually rose 4.3%.  This is good news for sellers, as investors across the country fear that the overabundance of houses on the market will lower prices further.  According to the Chicago Tribune, new housing developments have undergone a record seven-month long decline, which may be a reason that Chicago’s condo market is remaining somewhat stable - new developments have slowed in a market with a glut of housing.

However, sellers accross the city have still reported difficulty in unloading homes - even those who have slashed prices as much as 20% or more.   Perhaps this rise in condo prices reflects the myriad of new condo developments in Chicago coming onto the market.

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