New numbers suggest the U.S. housing crisis has already reached bottom and may be on the verge of recovery. The latest data from online broker ZipRealty shows housing inventory, or the number of homes for sale, declined last month in most U.S. markets, and helped stabilize prices. Financial experts say this is encouraging news and another sign that economic recovery may not be far away.
Experts say a strong housing market is key to economic recovery. And there are tentative new signs that home buyers are coming back.
Online broker ZipRealtysays not only has the number of potential buyers grown, the number of homes for sale is dropping.
"Inventory levels are actually declining during a season when it usually goes up," ZipRealty's CEO, Pat Lashinsky explains. "And median home prices of homes available for sale have actually gone up."
Housing inventory helps measure the health of the market by estimating how long it will take to sell available homes.
Six months is the average but ZipRealty's findings show it has declined from nearly 11 months in October 2007 to just eight and a half months in April.
Lawrence Yun, chief economist at the National Association of Realtors, says when inventory declines, prices tend to rise.
"The fact that inventory is declining is suggesting that soon we will see home prices begin to stabilize," he said. "In some markets it may begin to turn upward. So the downturn in the housing that we've had for the past three years may be coming to an end."
Lashinsky says a number of factors are motivating buyers.
These include low prices, low interest rates and the Obama administration's $8,000 tax credit for first time buyers.
"There's an excitement and a passion that hasn't been seen in the last 18 months right now," Lashinsky said.
But optimism in the housing markets does not mean foreclosures and all those "for sale" signs will disappear anytime soon. Unemployment is still high and credit remains hard to come by.
But in another sign that U.S. economic troubles may be easing, Citigroup announced Tuesday, that it approved over $1 billion in residential mortgage loans - in the first three months of 2009.