WASHINGTON, Feb 7: US existing-home sales have likely hit bottom and should gradually rise this year, but sales should still fall short of last year's mark, a real estate industry group said on Wednesday.

The National Association of Realtors said it expects sales of previously owned homes in 2007 to reach 6.44 million units, down slightly from last year's 6.48 million units.It forecast sales of 6.64 million in 2008."After reaching what appears to be the bottom in the fourth quarter of 2006, we expect existing home sales to gradually rise all this year and well into 2008," NAR chief economist David Lereah said in a statement.

While NAR said sales of existing homes looked set to rise, it looked for further weakness in new-home sales. It said sales of new homes would come in at 961,000 units this year and 971,000 in 2008, both below the 1.06 million sold last year."New-home sales should continue to slide, but we look for that sector to turn around later in the year.

When you put it all together, home sales may appear weak in comparison with the record surge in 2005, but they will be sustained at historically high levels that are in line with long-term demand," Lereah said.

NAR said it expected builders to break ground for 1.52 million new homes this year and forecast 2008 housing starts at 1.56 million.

Starts in 2006 totaled 1.8 million units.It said it expected median prices for existing homes to rise 1.9 this year to $226,200, and new-home prices to increase 1.8 per cent to $249,800."Mortgage interest rates remain favorable, and a gradual rise means potential buyers have some time to weigh purchase decisions," Lereah said.

"When existing home supplies become more balanced between buyers and sellers this spring, we'll see some modest price gains," he said.—Reuters