Lawrence Yun, chief economist for the National Association of Realtors (NAR), indicates that the outlook for housing and and the economy appear headed for a sustainable recovery.

He credits the home buyer tax credit and its enhanced expansion to more home buyers into the middle of 2010 with this optimistic assessment.  "Given the success of the first-time buyer tax credit to date, and the need for qualified buyers to continue to absorb inventory that will include additional foreclosures over the coming year, we are hopeful about the impact of the expanded tax credit because it will stabilize home prices," he said.  In fact, the credit is working better than first projected -  it now looks like we'll have 2.3 to 2.4 million first-time buyers this year."

In 2009, the NAR Profile of Home Buyers and Sellers reported that first-time home buyers accounted for 47% of all home sales.  In 2006, 36% sold to first-time buyers.

Yun believes that there will continue to be a steady draw down of inventory which will also help to stabilize home prices and increase the number sold by approximately 13.6% in 2010.  The biggest risk is caused by unemployment, which the government expects to peak at about 10%.

He predicts that mortgage rates for a 30 year fixed rate will average about 5.3% in the fourth quarter of this year and gradually rise in 2010, ending at around 5.8%.  Because of the decline in home prices, the NAR housing affordability index has risen by 30 points this year...meaning many more families can afford a home.  The biggest deterrent to buying is currently a lack of down payment or low credit scores.