The National Association of Realtors that once said that US home prices have not fell on a nationwide scale since the Great Depression now declare they are expected to do just that this year. The Realtors are expecting the prices for previously occupied homes will slide 0.7 percent this year compare to the 2006 level. The association had earlier projected that a 1.9 percent increase in the median home price this year. In its monthly housing outlook, the real estate industry group has said that tighter lending standards will cut into home sales even further than it was earlier projected, consequently driving prices lower. Economist with the Chicago-based association, Lawrence Yun, has said, ‘the 2007 median price for an existing home likely will decline 0.7 percent to $220,300, the first drop since the real estate trade group began keeping records in 1968 and probably the first decline since the Great Depression’. However, the median price for newly built homes is expected to increase by 0.4 percent to $246,200 this year, marking the smallest increase since prices fell in the year 1991 and 2 percent in 2008. On the other hand, a separate report released by the Mortgage Bankers Association has stated that applications for mortgages declined for the fourth straight week last week, led by a decline in refinance loans. In addition to it, adjustable-rate loans slip to the smallest share of applications in nearly four years, after the huge negative publicity in the past few months about the downside risks to ARMs. Home purchases are being derailed as subprime lenders stop financing mortgages or go out of business, increasing inventory and weakening demand, said Lawrence Yun. And in the last 12 months, as many as 40 subprime lenders have discontinued operations, gone out of business, or sought buyers as borrower defaults increased. Recently, New Century Financial, the largest independent subprime lender, has filed for bankruptcy protection. As a matter of fact, subprime borrowers with weak credit have recorded higher wrongdoing and foreclosures in recent months, triggering off a crisis in the home lending market. At the same time, investors have started draining the subprime market of capital while regulators and lawmakers give consideration to tougher lending standards. Therefore, it’s apparent that subprime vulnerability has strained the Realtor group to cast a shadow on its outlook.