But how much of a difference will the interest rates make in 2007? Many analysts say certain factors will keep low rates from making as much of an impact on the housing market as in previous years. The consensus points to three factors:

Factor 1: Prices are still high. Even though consumers can get more for their money with low interest rates, houses cost so much that they still might not be able to afford a house to justify the move. "The housing market is very interest-rate sensitive," says Dian Hymer, a real estate broker and author of "Starting Out: The Complete Home Buyer's Guide." But even if rates went back down to the lows of two to three years ago, "I'm not sure that the housing industry would do as well as it did because prices have gone up so much."

Factor 2: Poor timing. Another reason low interest rates might be less compelling has everything to do with timing. According to the NAR, the average homeowner moves once every seven years. Since so many people bought homes during the boom a few years ago, they might simply not be planning to move again soon. Interest rates may be stable, but "they're not quite as low as they were two years ago," says Celia Chen, director of Housing Economics for Moody's Economy.com. That means "many people who had any intention of buying homes within the next couple of years have already done so. Because the conditions were so good they did that and now there's just not that much of a need to trade up as before."

Factor 3: No rush to buy. Likewise, the fact that consumers don't expect rates to rise significantly for some time may actually lead them to put off home purchases this year as they wait to see whether prices continue to fall. With stable rates, "there's probably not that sense of urgency among the buyers," Porter says.

A market turnaround?
But some analysts are more excited about the interest rate environment and think its stability will, indeed, turn things around in 2007. "Consumers don't have to make snap decisions," says Walter Maloney, spokesman for the NAR. "But (the low rates) create a window of opportunity. We're looking to see sales pick up, and once you start to get to some threshold, you'll see it pick up a little bit more. There's been a lot of natural hesitancy on the part of buyers taking a wait-and-see attitude. That is something that we think has turned around in the last couple of months."

Porter agrees, saying low interest rates lead to more qualified home buyers. As potential buyers see prices stabilize, he predicts the low rates will give them that needed push into the market.

Fratantoni predicts the lending community will continue to come up with loan products that give consumers more buying power even as home prices remain high.

"I think there's enough flexibility in the system where lenders are going to keep providing products to enable the purchase of homes," he says.

Given the fact that the interest rate environment will remain stable, 2007 could very well be a good year for the real estate industry.

"We think in about six months the market will regain its footing and start to pick up again and you might even start to see some increase in construction spending," Fratantoni says. "Our anticipation is that's going to be somewhere from the middle to end of this year."