Dr. David Lereah, NAR's chief economist, says a brief dip to zero ornegative growth as measured by the gross domestic product should be followed shortly by a rebound. This rebound will be stimulated by lower interest rates and historically strong home sales.

Housing continues to be the most stable sector of the economy, but it also is weakening, Lereah says. The NAR projects existing-home sales to slip 0.8% in 2001, but the total of 4.97 million units would match the third-best year on record," he says.

NAR expects new-home sales to drop 3.2% to a total of 873,000 units in 2001, while housing starts are forecast to decline 1.4% to 1.58 million units this year. The 30-year fixed mortgage interest rate is projected to average 6.8% this year, down from 8.1% in 2000; rates could be slightly lower in the second and third quarters.