SAN FRANCISCO -- America's historic real estate boom is cresting, and the rate at which home prices appreciate should begin to slow significantly next year, according to the chief economic forecaster for the National Association of Realtors.
It was the closest statement yet to an admission by the real estate industry that the bull market for housing may have run its course.
"It's the peak of the boom," David Lereah said at the Chicago-based trade group's annual meeting here, which concluded last week. "But we're looking at a soft landing next year. I can't guarantee that there won't be some hard landings in some markets, where prices will actually decline. In fact, there will probably be two or three over the next two years that do pop."
If Lereah's prediction is correct, the national economic impact of what is to come will be significant.
For several years, real estate prognosticators - including anyone interested in buying or selling a house - have watched prices rise and rise and wondered when the era of extraordinary appreciation might end.
In many markets, there has been widespread speculation that the boom could turn into an unsustainable bubble that might eventually pop, causing prices to actually fall.
Lereah did not see that happening on a national scale, but a real estate market at the peak of its boom doesn't continue to skyrocket.
The NAR's prediction represents an acknowledgement that this could be the end of a joy ride that has allowed many in the industry to prosper. To make that statement at the real estate industry's convention - an annual celebration of its role in driving the economy - represented a break from the usual mood.
With average 30-year mortgage rates expected to reach 6.7 percent by the end of next year, Lereah predicted that:
Existing-home sales will decline 3.5 percent next year, to about 6.9 million from this year's projected 7.1 million.
New-home sales will fall 4.5 percent.
Home price growth should slow significantly, with this year's median 12.4 percent appreciation slowing to 5.3 percent next year.
"That 12 percent appreciation is unsustainable," he said. "Already there's a transition going on in some markets, from a seller's market to a buyer's market.
"People will have to adjust their expectations. Instead of getting 20 percent more [for their home], they may have to get 5."
The housing market can thank historically low mortgage interest rates for a multiyear hot streak. Conversely, rising mortgage rates - now more than a half-point higher than a year ago - can be expected to cut housing demand because they carry higher monthly payments. Like all interest rates, mortgages rise and fall based upon broad economic factors rather than strictly on consumer demand.
Richard DeKaser, chief economist for National City Bank in Cleveland, said the NAR prediction of a "modest cooling" is a fair description, though rosier than his own analysis of existing-home sales dropping 7 percent and new-home sales declining by 12 percent.
"A downturn the likes of what the NAR is predicting would be almost ideal and welcome," DeKaser said. "It's not implausible, just a tad more optimistic than I would be expecting."
Real estate agents at the convention did not focus all their attention on the possible end of the boom. They still found good news to focus on.
"Real estate is going to be good forever because of the echo boom generation [born beginning in 1982]," J. Lennox Scott, a leading Seattle-area broker, told a roomful of conventioneers. "They're going to be streaming into the first-time buyer market: 75 million of them."
Mary Umberger writes for The Chicago Tribune.