Washington The high-flying housing market should make a safe landing by gradually losing altitude, the White House suggested Monday.
Housing has been an important source of power for the economy as home sales hit record highs during the past five years. Low mortgage rates were a factor behind brisk housing activity.
"A gradual slowing of homebuilding appears more likely than a sharp drop because the elevated level of house prices will sustain homebuilding as a profitable enterprise for some time," according to President Bush's annual economic report to Congress.
The direction of the housing market is being watched. Most private analysts also are expecting gradual moderation. If the housing market were to collapse, it would pose grave dangers to the country's overall economic health.
House prices, which have risen rapidly in value, also will probably see slower growth this year, said Matthew Slaughter, a member of the White House's Council of Economic Advisers.
Even with a housing slowdown, the economy is expected to log respectable economic growth this year, according to the White House's projections.
The president's report projects that the economy will grow by 3.4 percent as measured from the fourth quarter of last year to the fourth quarter of this year. In 2007, the economy should register another solid year, growing by 3.3 percent.
The president's report said economic challenges include: health care costs, the massive strain on federal resources that will come from the looming retirement of millions, and trade and budget deficits.