Tighter lending criteria and fallout from the subprime loan debacle will lead to a healthier housing market with greater assurance that owners can handle mortgage adjustments, but higher loan standards will slow the housing recovery, according to the latest forecast by the National Association of Realtors. David Lereah, NAR's chief economist, said the changes are necessary for the long-term health of the housing market. "We want to people to be able to stay in their homes with mortgage terms they understand and can handle," he said. "Simply stated, a loan with the lowest monthly payment probably isn't in your best interests -- borrowers need to understand worst-case scenarios. If you're in a mortgage you aren't comfortable with, now is an excellent time to refinance, if you can, with historically low rates on safer conventional loans." Lereah's position on the mortgage banking market led to more than a few chuckles among industry participants interviewed by Housing Wire. "Lereah and the NAR gang were touting the 'gains in homeownership' that subprime lending drove for 'the American public' less than one year ago," said one source, who asked not to be identified. "The housing boom our industry drove made his constituents plenty of money when times were good. I guess he'll sing whatever song fits the mood of the day." The NAR forecasted that existing-home sales are likely to total 6.34 million in 2007 and 6.52 million next year, in contrast with 6.48 million in 2006. The realtor-led trade organization also said that new-home sales are expected to register 904,000 this year and 935,000 in 2008, below the 1.05 million pace set last year. Housing starts are estimated at 1.47 million in 2007 and 1.55 million next year, down from 1.80 million units in 2006. "As home sales moderate, overall home prices will be essentially flat this year," Lereah said. "The good news is that inventories remain well below the levels experienced during the last housing downturn in the early 1990s, and supplies are close to balance in many areas." For more information, visit http://www.realtor.org.