WASHINGTON - Bucking conventional wisdom, a trade group for real estate agents said yesterday that the battered housing market was on the verge of stabilizing and slightly improved its outlook for 2007 and 2008 home sales.

The revised monthly forecast from the National Association of Realtors, which followed nine straight months of downward revisions, calls for U.S. existing-home sales to fall 12.5 percent this year to 5.67 million - the lowest level since 2002.

Last month, the association had predicted 5.66 million existing homes would be sold this year, down from 6.48 million last year.

The real estate group also forecast that sales would show a small rise in 2008 to 5.7 million, up from last month's prediction of 5.69 million.

Numerous other economists, however, are far less optimistic. They predict weak sales and falling prices through next year and beyond and emphasize that those problems could worsen if the economy sinks into a recession.

Patrick Newport, an economist at Global Insight Inc., a Boston economic-analysis firm, forecasts that home sales will drop from 5.66 million this year to 4.7 million in 2008 - 1 million fewer home sales than the real estate group has forecast.

"With the economy and job growth slowing . . . it is hard to believe that we have hit bottom," Newport said in a note to clients yesterday. "Our view is that prices need to drop further, and that housing activity will hit bottom about the middle of 2008."

Joel Naroff, chief economist for Commerce Bank in Cherry Hill, N.J., said the United States was 12 to 18 months away from a "normal housing market," in which sales are growing and prices are rising or stable.