Home prices are likely to decline in 2008 for the second straight year, the National Association of Realtors said Thursday, as the trade group released new readings showing addition weakness in the already battered home sale market.

The Realtors, in its monthly economic and sales outlook, is forecasting a 1.2% drop in prices of existing homes sold this year. A month ago it was still forecasting that prices would be flat this year and that a home market rebound in the last half of 2008 would make up for declines in the first half of the year.

Last year, when the median price slipped 1.4 from 2006 levels, was the first on record that the Realtors recorded full-year decline in existing home prices.

The group is also forecasting a 4.8% decline in the number of existing homes sold this year. A month ago it was still forecasting a 0.9% pickup in the sales. Existing home sales plunged 12.8% in 2007, according to the group's figures.

"We're seeing a pattern that is consistent with skimming along the bottom of the cycle, and sales could ease modestly," said Lawrence Yun, the group's chief economist, in a statement.

The group's forecast sees even greater weakness in new home sales in the year ahead, with a 4.3% drop in median prices and a 17.7% plunge in the number of sales.

In addition, the group's Pending Home Sales Index for December showed the number of homes under contract fell once again to the second-lowest level on record.

The index fell 1.5% to a reading of 85.9. That was better than only the record low of 85.5 set in August, when the meltdown in the mortgage finance market made it difficult for many buyers to arrange financing.

The pending home sales index is more forward looking than the group's more widely followed reading on existing home sales, which tracks closings. A home is generally under contract for a month or two before closing.