NAR: Home Values to Drop for 1st Time This Year

Washington, DC, April 12, 2007---The National Association of Realtors said its index of home values is set to drop in 2007 for the first time in nearly 40 years of records.

The NAR said the median price of an existing-home is expected to slip 0.7 percent to $220,300 this year. Last month, the group predicted the median price of an existing home would increase 1.2 percent this year.

The association has never predicted an annual decline since it started tracking median prices in 1968.

Investors have drained the subprime market of capital while regulators and lawmakers mull tougher lending standards.

Subprime weakness has forced the Realtor group to darken its outlook, a spokesman said.

Tougher loan rules that are now replacing subprime standards "will slow the housing recovery," the trade group said, but it will also see a return to normal lending conditions.

That contraction ultimately will help the housing market, the trade association said.

"Tighter lending criteria and fallout from the subprime loan debacle will lead to a healthier housing market with greater assurances that owners can handle mortgage adjustments," the group said in its statement.

On Wednesday, the trade group lowered its expectations for the volume of home sales.

Existing home sales are likely to total 6.34 million in 2007, the group said. Last month, the group said it saw sales of previously owned homes hitting 6.42 million.

New homes sales should hit 904,000 this year, the group said. Last month, it said new homes sales should hit 950,000 for the year.

The median new-home price should increase 0.4 percent to $246,200 this year after gaining 1.8 percent in 2006, the group said.