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KAI RYSSDAL: We've been here before, I know. Trying to figure out whether a given economic report mean housing's going to turn around. Let's just call today another step in our mutual adventure.

The Commerce Department came out with new-home sales figures today. Although they were up in December, 2006 was a year the home-building business would rather forget. For the year, new-home sales were down more than 17 percent. That's the biggest drop since 1989.

Edward Leamer directs the Anderson UCLA economic forecast.

EDWARD LEAMER: Well, I don't see any evidence that we've hit bottom. I expect we will hit bottom sometime. But there won't be a recovery, we're gonna bounce along the bottom for some significant period of time.

Leamer points out it was warm last month — one reason sales jumped so sharply. But growing desperation from builders is another factor.

LEAMER: If sales are going up while prices are going up, that's a symptom of strength in the market. But if sales are going up when prices are going down, that's a symptom of builders desperate to move their inventory.

That's Edward Leamer of the Anderson UCLA economic forecast.