Positive numbers, but housing may not have bottomed

A number of experts believe that recent statistics show that the US housing market has hit bottom and that prices and inventories have a foundation to improve. New Case-Schiller data and numbers from the government show that sales have begun to tick up in a number of markets.

Most of the optimism is probably premature because it fails to look at a few basic trends. The first of these is that those who are currently unemployed are not only unlikely to become new home buyers, but those who currently have homes are likely to default on mortgages and force home prices lower and inventory higher. Now that the recession is slowing there is some belief that unemployment rates will level off. But, large companies are still announcing lay-offs with some frequency and smaller firms, which have no access to credit, are likely do the same.