"The higher loan limits for both FHA and conventional loans will increase consumer choice and provide greater access to lower interest rate mortgage loan limits," the association's chief economist Lawrence Yun said in a statement issued Thursday. "Therefore, a notable rise in home sales can be anticipated in the second half of the year."

The association projects a flattening of the market in the first half of the year with an annualized level of 4.9 million homes sold. This is projected to jump to 5.8 million in the second half.

The projected median price is expected to fall 1.2 percent to $216,000 this year and then rise 3.5 percent to $223,800 in 2009, the association said.