43 basis points over the past two weeks.

The sharp drop in mortgage rates likely reflects souring investor sentiment over the future of the U.S. economy. Investors anticipating an economic slowdown or recession are snapping up U.S. Treasury securities, causing yields to fall. The direction of fixed mortgage rates and Treasury bond rates often is closely correlated.

Several factors have contributed to softening demand for real estate, including an oversupply of homes on the market, a spike in foreclosure rates and tightening credit conditions brought on by the subprime mortgage crisis.

Falling rates offer a rare glimmer of hope to the nation's housing market, which has been slumping since hitting record highs earlier this decade.

This week brought another steady stream of glum housing news.

The NAR now forecasts home prices to fall by a record quarterly year-over-year 5.3 percent during the first three months of 2008.

On Jan. 8, the National Association of Realtors reported that its Pending Home Sales Index slipped to 87.6 in November. The index measures the level of U.S. sales agreements, and the 2.6 percent drop far exceeded experts' projections of a 0.8 percent decline.

Meanwhile, Fannie Mae President and CEO Daniel Mudd recently predicted that the housing downturn would continue through 2010. Fannie Mae is the nation's largest financer and guarantor of home loans.

To date, the administration's program has focused on freezing mortgage rates for some homeowners with subprime mortgages. However, Paulson said the administration is considering expanding the program to people who hold prime mortgages.

Concerns over housing woes reach all the way to the White House. U.S. Treasury Secretary Hank Paulson has said he sees "no evidence" that the nation's housing market is near a bottom.

As a result, Paulson has said the Bush administration may consider extending its efforts to broker agreements between mortgage lenders and at-risk homeowners with adjustable-rate mortgages.

-- Chris Kissell