PORTLAND — The strength of home sales this winter and spring will be a key indicator of how well the housing market is recovering, one of the nation’s top real estate forecasters said here today.

A return of activity that was more typical from 2000 to 2003 would reflect a market that can stand without government tax credits or other special stimulus, according to Lawrence Yun, chief economist at the National Association of Realtors.

But Yun, known for his optimistic outlooks, said he had little confidence now in predicting the pace of the recovery. There are too many unknowns, he said, from when job creation and business spending will pick up, to the outcome of the mid-term elections and the foreclosure muddle, to be more sure about where housing is headed.

“We’re in a very uncertain economic and housing situation,” he said.

Yun made his comments during a presentation at the annual meeting of the Greater Portland Board of Realtors. He did have one clear message for the home sellers and their clients: For financially secure people, low prices and historically low mortgage rates make this a very good time to buy.

Yun had last spoken to the group two years ago, during his first visit to Maine. At the time, he predicted a national housing recovery in 2009, a forecast that proved very wrong.

Yun was more circumspect on this trip. He offered the brokers and lenders a thoughtful overview of the many complicating factors influencing the economy, and by extension, the housing market.

Realtors had lobbied hard last year for retaining and expanding the federal tax credit for homebuyers, and Yun said sales and prices would have fallen further without it. Activity slowed after the credit expired last spring, as he expected, but rising sales in the past two months are early signs of a market that can recover and grow without special help.

That’s why the coming months will be telling.

Job creation is critical, and Yun is closely watching weekly unemployment claims. The picture is improving, he said, but the unemployment rate needs to fall further and faster.

Job creation is tied to business spending, and that link, he said, is one of the great mysteries of this economic cycle. Corporate profits are up, but spending is down. The reasons are uncertain. One thought is that business is waiting to get a better read on the cost of health care, taxes and other government policies. Another idea is that consumers are holding back on purchases, and businesses don’t want to add too much capacity when demand is low.

“The key is business spending,” Yun said. “When will business spending pick up?”

Home sales, Yun said, will continue to struggle in the near term until the market shakes the hangover from the end of tax credits. After that, it’s likely to rise in line with job growth.

While keeping his remarks broad, Yun did have a few observations about Greater Portland, where median prices are rising slowly today and have returned roughly to 2003 levels. In Boston, which serves as a regional indicator, prices are up 5 percent in the past 18 months.
Yun also noted that the number of jobs in Portland peaked in 2008, but declined only modestly and remain above levels in 2000.

“Portland is doing a lot better than the rest of the country,” he said.

Yun’s presentation reflected what a couple of area brokers are seeing. Activity paused after the tax credit ended and remains slow, but buyers are starting to react to the lower prices and interest rates, according to Michelle Flaherty of Prudential Northeast Properties in Westbrook.

Both Flaherty and Tina Lucas of Lucas Real Estate in Portland said they’re hoping for a boost in consumer and business confidence after the elections. Whoever wins, they said, it would remove some of the uncertainty over government policies. 

“That’s the key, consumer confidence,” Lucas said.