Testifying before the Senate Economic Policy and Housing and Transportation Subcommittees, NAHB Chief Economist David Seiders said that while the housing downswing still has some distance to go, “various economic and financial market fundamentals figure to be supportive of housing demand for the foreseeable future.”

Seiders also told lawmakers there are several downside risks to the housing and economic outlook he presented. These include the possibility of spikes in interest rates or energy prices, a large resale of homes back onto the markets by investors/speculators and uncertainties regarding the size of the inventory overhang in the market for new homes.

Testifying before the same Senate committee, representatives from the National Association of Realtors (NAR) said housing prices are expected to continue to have a limited fall throughout 2006. In addition, NAR noted that the sellers?EUR??,,????'??? market is transitioning to a buyers?EUR??,,????'??? market, which can be healthy for some local economies.

?EUR??,,????'??For the past five years, the housing market has been a steadfast leader in the U.S. economy,?EUR??,,????'?? Thomas M. Stevens, president of NAR, said. ?EUR??,,????'??After five years of outstanding growth, the housing market is undergoing a period of adjustment and becoming more and more of a balanced market between buyers and sellers.?EUR??,,????'??

Stevens said that with the falling demand and increased supply, home prices still realized slight appreciation though it was less than one percent, where over the past few years homes were appreciating at double-digit rates.

?EUR??,,????'??Contrary to many reports, there is not a ?EUR??,,????'??national housing bubble,?EUR??,,????'????EUR??,,????'?? said Stevens. ?EUR??,,????'??We were seeing home prices and mortgage debt servicing cost-to-income ratios increase to unhealthy levels in some housing markets, which precipitate an adjustment.?EUR??,,????'??

NAR forecasts a drop in home sales of around eight percent in 2006, followed by another two percent decline in 2007. These numbers are based on the stabilizing of mortgage rates and modest expansion of the economy. Also predicted is that home price growth will be minimal?EUR??,,????'??+less than three percent in 2006 and 2007.

NAHB?EUR??,,????'???s forecast has a cumulative shortfall of housing starts of roughly 400,000 units from the middle of this year through the end of 2008, in line with the estimated excess supply generated during the recent boom period.