June 6 (Bloomberg) -- U.S. home sales and price declines in 2007 are going to be steeper than earlier forecast, contributing to slower economic growth, the National Association of Realtors said.

Sales of previously owned homes probably will tumble 4.6 percent to 6.18 million and the U.S. median home price likely will fall 1.3 percent to $219,100, the Chicago-based trade group said in a report today. A month ago, the association said it expected 2007 home sales to decline 2.9 percent and home prices to slide 1 percent in the first price drop on record.

A 14-year high in the number of homes for sale in April is sapping consumer confidence in the housing market during a time of year that traditionally is the strongest for real estate, said Lawrence Yun, an economist for the trade group. A ``sluggish'' spring selling season will help to shave more than a percentage point off U.S. economic growth in 2007, he said.

``People are looking, but they're not buying,'' Yun said in an interview. Real estate agents report ``an increase in traffic at open houses, but people are taking their time because inventory is so plentiful.''

Sales of new houses probably will drop 18 percent this year, matching last year's decline, the association said in the forecast. Builders probably will sell 860,000 houses, down from 1.05 million last year. In 2005, a record 1.28 million new houses were sold.

Housing Inventory

New-home inventory dropped to 6.5 months in April, the lowest of 2007, after reaching a 16-year high of 8.1 months in March, the Commerce Department said in a May 24 report. Sales of new houses account for about 15 percent of residential real estate transactions.

The inventory of existing homes for sale in April, measured by the estimated time it would take to sell them all, was 8.4 months. That was the highest since August 1992 when it was 8.6 months, Yun said.

Home resales probably will grow to 6.41 million next year, and new-home sales likely will increase to 901,000, the real estate trade group said. The current quarter probably will be the bottom for the existing home market, while new-home sales likely will trough in the fourth quarter, according to the report.

Prices will begin to rebound in 2008's first quarter and grow for the rest of the year, the report said. Measured annually, the median U.S. price for an existing home probably will gain 1.7 percent next year from 2007. The new-home median likely will grow 2.6 percent after falling 2.3 percent this year.

The U.S. economy probably will expand at a 2 percent pace in 2007, compared with 3.3 percent last year, Yun said. Unemployment probably will match last year's rate, at 4.6 percent, according to the forecast.

``Because of reductions in home sales and new home construction, the economy will expand at a subpar pace in 2007,'' the report said.

To contact the reporter on this story: Kathleen M. Howley in Boston at kmhowley@bloomberg.net.

Last Updated: June 6, 2007 13:53 EDT