The National Association of REALTORS points out that the following facts are often overlooked by media reports:

-While it's true that the median price of an existing single-family home actually did drop by 1.8 percent from 2006 to 2007, it's important to put this into context.  Over the previous six years--the typical length of time an owner stays in one home--the median price has risen nearly 40 percent.  Those owners gave back just about 2 percent of that gain--leaving them with a very handsome appreciation rate.
 
-Mortgage interest rates today are hovering around 6 percent--about the same as they were 45 years ago.  Interest rates on both fixed-rate and adjustable-rate mortgages have been trending down.  Falling rates do not portend a recession.

-Interest rates on jumbo loans, however, (those over the Fannie Mae and Freddie Mac loan limit) remain well above the conventional mortgage rates.  Therefore, it isn't surprising that the share of single-family homes selling for more that $500,000 (many of which rely on jumbo loans) fell to 12.4 percent of transactions in December 2007 from 14.2 percent a year earlier.  This could also account for some of the drop in the median price last year. 

-Low mortgage rates trump the job market during recessions.  The last recession was in 2001 and the Fed was cutting rates and mortgage rates were falling. Homes sales then began to rise strongly. 

-Past deep housing recessions were accompanied by prolonged job losses and rising interest rates.  We have falling interest rates today.

-The economy added about 4 million jobs over the last two years.  Household formation is about half of what it should be given the employment growth, which indicates that many buyers are sidelined right now. 

-When the housing market begins to recover, this usually signals the start of an economic recovery. 

-Today's low interest rates will lessen the pressure on foreclosures.  Rising affordability assures higher home sales and home prices.  Furthermore, low rates lessen the burden on existing homeowners with ARMS because the resets are not as financially painful.

-The bottom line--We have historically low interest rates and we will likely avoid recession (but the economic expansion will be slow in 2008).  The high interest rates that have characterized past recessions are nowhere in sight.

Source:  National Association of REALTORS