The most severe real estate recession in a generation sent sales of existing homes plunging 12.8 percent last year — the steepest annual dive in 25 years — and the median U.S. home price fell, probably for the first year since the Great Depression, the National Association of Realtors said yesterday.

The 2008 outlook remains equally grim, though many experts expect the housing market to bottom out by the middle or end of the year.

Sales could fall a further 13 percent this year, says Doug Duncan, chief economist of the Mortgage Bankers Association — and even more if the overall economy falls into recession. He puts those odds at 50-50.

"It's going to be an intense and turbulent year," says Steve O'Connor, the MBA's senior vice president.

There was, however, a glimmer of good news yesterday for buyers, sellers and homeowners, especially in such high-cost states as California and Florida, where home prices are falling and foreclosures are soaring. Congressional leaders struck an agreement on a stimulus package that includes a one-year rise in the loan limit for Fannie Mae and Freddie Mac, to $729,750.

Currently, Fannie and Freddie can buy only mortgages that are $417,000 or less. Larger loans, called jumbos, have higher rates because they're riskier for investors, and that's hurt borrowers in places like California, where the median home costs about $489,000.

The congressional package also raises the dollar limit on loans that can be insured by the Federal Housing Administration, which caters to first-time and working-income families, to $729,750 from $367,000. In today's market, most lenders require 10 percent down payments; the FHA loans need only 3 percent.

The stimulus plan will also help millions of homeowners refinance to take advantage of falling rates, which have hit their lowest point in nearly four years.

In December, existing-home sales dipped 2.2 percent from November, to a seasonally adjusted pace of 4.89 million units. That pace was down 22 percent from December 2006. The median price fell a record 6 percent last month, to $208,400, reflecting trouble in the jumbo-loan market. "I keep thinking a bottom is near, but we haven't gotten there yet," says Joel Naroff, chief economist of Naroff Economic Advisors.