MarketWatch
WASHINGTON - U.S. home prices will probably fall temporarily as the housing market corrects, the National Association of Realtors said yesterday.

Prices should bounce higher in a few months, said David Lereah, chief economist for the real estate group ''as the market works through a build in housing inventory.''

Median existing-home sales prices should rise about 2.8 percent this year and 2.2 percent next year, the group said in its monthly economic outlook. Median new-home prices are expected to rise 0.2 percent in 2006 and 2.4 percent in 2007.

After adjusting for inflation, median home prices would be lower at the end of 2007 than they are now, the group projects.

Existing-home prices have risen at an average of 9.6 percent annually in the past four years, well ahead of the inflation rate. New-home prices rose 13.3 percent in 2004 and 9 percent in 2005.

''This year sales are slowing, homes are plentiful and sellers are negotiating,'' Lereah said. ''Under these conditions, we'll probably see prices dip temporarily below year-ago levels as the market works through a build-up in housing inventory.''

Twenty-five of 48 economists surveyed in the Wall Street Journal's monthly survey said they expect little or no growth in the Office of Federal Housing Enterprise Oversight's home price index in 2007, the newspaper reported yesterday in its online edition.

(Published: September 8, 2006)

Source: Cape Cod Times