Housing prices flat in January, could signal bottom

Housing prices were unchanged in January compared with a month earlier, a sign that prices might have hit rock bottom and could be stabilizing. 

In December, prices increased 0.1 percent, revised downward from 0.7 percent — prices fell year-over-year through January by 0.8 percent, the Federal Housing Finance Agency’s monthly House Price Index reported on Thursday. 

Home prices have been dropping as distressed housing, including foreclosures, have flooded the market. 

The index is down 19.2 percent from its April 2007 peak and is roughly the same as the February 2004 index level.

Housing experts have mixed feelings on whether prices have actually hit rock bottom — in the next several months, the sector should provide an indication of which direction prices are headed. 

The housing finance system this year will probably shake out most of the remaining bad loans, giving the market a chance to start healing. 

Homebuilders, whose confidence in the sector is on the rise, have said they expect gradual improvement this year but better gains next year. 

Still, a full recovery could still be years away, experts say. 

An improving market would fuel a more robust economic recovery, especially if the sector can raise its contribution to economic growth. 

Sales of previously owned homes in January and February were at their highest level since 2007, according to data out Wednesday, though sales in February edged down by 0.9 percent from January on a seasonally adjusted basis.

The FHFA monthly index is calculated using purchase prices of houses backing mortgages that have been sold to or guaranteed by Fannie Mae or Freddie Mac. 

For the nine census divisions, seasonally adjusted monthly price changes from December to January ranged from -1.7 percent in the West South Central division to +4.7 percent in the West North Central division.