The housing market blues showed no signs of lifting yesterday as the National Association of Realtors warned that U.S. home sales in 2007 could fall to a five-year low, and major home builder Toll Bros. projected a 21 percent drop in quarterly revenue.

"It still looks pretty gruesome," said Joel Naroff, president of Naroff Economic Advisors. "The market has truly cratered, and it's not going to turn as quickly as people had hoped."

Bloated home prices, feverish real-estate speculation and widespread defaults of subprime mortgages have led to a housing slump that some economists fear could drag the U.S. economy into recession.

In its monthly forecast, the NAR projects existing-home sales this year of 6 million — the lowest since 2002 — and sales of 6.4 million next year. It forecasts new-home sales of 852,000 this year and 848,000 in 2008. That's down from 1.1 million in 2006.

Lawrence Yun, NAR senior economist, said that the big inventory glut of unsold homes should be reduced by serious long-term homebuyers, fewer speculative investors and fewer new homes under construction.

"With the population growing, the demand for homes isn't going away — it's just being delayed," Yun said in a statement.

Meanwhile, Toll Bros., the largest U.S. builder of luxury homes, said that its third-quarter revenue dropped 21 percent to $1.2 billion. Final results will be released Aug. 22. CEO Robert Toll cautioned the credit crisis could further hurt demand for homes, and he said the company would not provide earnings guidance because of the volatile market.

"Hesitant customers remain on the sidelines, unsure of whether home prices have bottomed," Toll said. "We caution that, with the uncertainties roiling the credit markets right now, the pace of home sales could slow further until the credit markets settle down."

Other housing-industry companies are hurting, too. Home builders D.R. Horton and Beazer Homes USA recently posted quarterly losses, while American Home Mortgage Investment filed for bankruptcy-court protection this week.

How long will the housing slump last? Many factors come into play, including job growth, interest rates, personal income levels and consumer sentiment. Perhaps the biggest unknown: whether the credit crisis and foreclosures in the subprime mortgage market will worsen or level off in the coming quarters.

David Seiders, chief economist at the National Association of Home Builders, believes the housing market should bounce back next year.

"Sales and housing starts should start to come together in 2008 and move into 2009 with pretty good momentum," Seiders says.

Tim Costello, CEO of Builder Homesite, a marketing group for home builders, says that home builders are taking a cautious view of the slump.

"It's a difficult time now," he says. "We haven't seen the market bottom out and rebound yet, and when that happens will vary from market to market."