By Robert Freedman, Senior Editor, REALTOR® magazine
Just how important is another economic stimulus effort to home sales? If you ask NAR Chief Economist Lawrence Yun, he'll say the difference is seven percentage points. That is, with another federal stimulus package--one that provides real help to home buyers by making mortgage financing available at below-market interest rates--we can expect a 10 percent increase in home sales in 2009 over 2008. Thus, if we assume we finish 2008 with about 5 million existing-home sales, then a 10 percent hike would mean an additional 500,000 sales. That's significant. Without another stimulus? The gain will be closer to 3 percent.

The fact is, on a national basis monthly home sales are holding fairly steady. The problem is that steady sales aren't enough to bring down inventory levels, which on a national basis are at about nine months, if not more. To get those inventories down, something needs to happen to drive households back into the market. That's where the stimulus effort comes in.

What's important for federal lawmakers is that this isn't just a housing problem; without a turnaround in home sales, the broader economy can't hope to see a recovery. So it's in everyone's interest for the government to help spur a turnaround in housing. Hence NAR's big push for its four-point legislative plan, which would give the federal government the tools it needs to push interest rates down to below the market rate and create other incentives for households to return to the market. I spoke with Yun in a video interview last week in which he spells out the situation in clear terms. Watch the interview now: