"We do expect a soft landing, however, the yellow caution flag is up and we need to keep a close eye on the indicators," he says. "In fact, the Fed may have to cut interest rates to avoid a hard landing."

Higher energy prices and increased volatility in the stock market, with major corrections in technology stocks, have raised concerns, Lereah says. Further slowing is evident with easing indicators, such as durable goods, consumer confidence and car sales. Even with stock losses in 2000, most people remain in good shape because of a tremendous building of wealth during the last five years.

Housing continues to be one of the most stable sectors of the economy. According to NAR figures, existing home sales will be off 4% this year. Next year's sales should be fairly stable, declining 1.1%, Lereah says. NAR expects a resale volume of 4.99 million sales this year, with 4.94 million forecast for 2001. New-home sales are expected to slip only 1.7% this year to 892,000 units, with 2001 projected at 861,000 units, a decline of 3.4% from this year. Housing starts are forecast to decline 4.8% percent to a total of 1.59 million units this year, then slip 3.8% to 1.53 million in 2001.

NAR expects the national median existing-home price for 2000 as a whole to be $138,900, an increase of 4.4% over last year, then rise 5.5% in 2001 to $146,500. The typical new home price is expected to be $166,300 this year, up 4.3% from 1999, then rise 5.6% in 2001 to $175,700.

The association also projects 30-year fixed mortgage interest rates to decline slightly from just under 7.8% currently to about 7.5% by the end of 2001.