Southern California home prices held steady for the third straight month in March, a sign that the housing slump may be near its bottom.
The median sale price remained at $250,000 for the six-county region, which is less than half the median value of homes at the market's peak in 2007. But the fact that home prices have stayed the same since January could be an indicator that the market is beginning to stabilize -- which is considered key to a broader economic recovery.
"In the normal behavior of a recession, the first improvement is in the housing sector, followed by autos," said economist Edward Leamer, director of the UCLA Anderson Forecast. "When somebody buys a home or buys a car, they're predicting economic growth, they're predicting they're going to be employed. It's a statement of optimism."
The housing numbers released by MDA DataQuick on Wednesday came as the Federal Reserve Board reported that the pace of the nation's economic decline was easing in a few regions, including California and New York.
The Fed's report was the latest in a series of indicators that economic conditions may be beginning to improve, which has spurred new confidence in the stock market.
One question mark, for housing and the economy as a whole, is the availability of credit -- whether for home sales, business expansions or other purposes.
For the last year, home sales have become increasingly dominated by the low end of the market as the presence of a large number of foreclosures pushed down prices at the same time that credit became available for smaller loans.
But as the credit crisis eases, banks and other lenders are expected to expand their offerings of so-called jumbo loans of more than $417,000. That could expand sales of the nearly dormant market for more expensive homes.
Conversely, if lenders tighten credit, the housing slump could be prolonged, said David Levine, a UC Berkeley economist.
"At a lot of banks, there may be more bad news waiting to happen," he said. "Nobody knows how bad it is."
Levine said there was so much overbuilding during the boom that it could be a long time before home construction -- an important source of job creation in the state -- begins again.
"One robin does not make a spring," he said. "One fairly optimistic piece of news does not mean the very big trouble we're in is over."
Higher mortgage rates could also throw cold water on a recovery, noted Lakewood real estate broker David Emerson.
