Some Economists See Price Bottom this Summer.

Washington -- Existing single-family home sales fell by 13% in 2007 and new home sales plummeted 26.4%, but many economists expect sales will bottom out this summer while house prices continue to fall.

Fannie Mae economists expected single-family home sales will drop another 10% this year and Freddie Mac is forecasting an 11% decline.

"We expect housing starts and sales to stabilize in the middle of the year, with sustained gains beginning in 2009," according to Fannie's director of economics Molly Boesel.

Meanwhile, house prices declined 7.7% during the first 11 months of 2007, according to the Standard & Poor's/Case-Shiller housing price index, which covers 20 metropolitan statistical areas.

"There is now a board consensus that national house prices will fall by no less than 15% from their peak to their eventual trough," Mark Zandi, chief economist for Moody's Economy.com, told a congressional panel last week.

Economists at Merrill Lynch contend that the housing boom was driven mainly by a financing boom and the days of the easy mortgage are gone. They expect home prices will decline 15% in 2008 and another 10% in 2009.

"We have looked more closely at the housing fundamentals and we remain convinced that home prices must fall by 20%-30% from current levels to correct the supply and demand imbalances," Merrill Lynch economists say in a Jan. 22 commentary.