Home sales are coming down from the mountain peak, but they will level out at a high plateau – a plateau that is higher than previous peaks in the housing cycle.

A modest downtrend to a sales volume that is expected to be the second-best year ever in 2006 will be good for the long-term health of the housing sector.

A modest downtrend will be good for the long-term health of the housing sector.

A modest slowdown in home sales, coupled with improvements in the housing inventory, means the market is in the process of normalization.

The current pace of home sales activity remains historically strong - only eight months have had a higher sales pace. A modest downtrend, to a sales volume that is expected to be the second-best year ever in 2006, will be good for the long-term health of the housing sector.

The current pace of home sales activity remains historically strong only eight months have had a higher sales pace.

These historically high home-price gains are the simple result of more buyers than sellers in the market. The good news is that the supply of homes on the market has been trending up and we are entering a period of a more normal balance in supply and demand.

The underlying fundamentals of the housing market are solid and sales will stay historically strong, but they will trend modestly down from current peaks. Masked by the data are early signs that housing is starting to wind down from a boom and will transition into an expansion - in other words, a soft landing.

In the handful of areas with price declines, none had previously experienced rapid price growth. In fact, they were all lower-cost areas experiencing one or both of the conditions necessary for temporary price softness -- local economic weakness, mainly in jobs, or a large supply of homes available in the local market.

So, 2005, when we look back, was the best year in housing in recent memory, probably of all time.