The economy continues to send mixed messages -- some encouraging for real estate, some not -- but this week the positive are edging out the negatives.

Take housing prices for example. The research company with the largest database of ongoing real estate transactions - First American CoreLogic, which tracks property values in thousands of Zip codes and neighborhoods - reports that nominal price drops have "stabilized" in 883 core-based statistical areas, showing no declines in the past two months.

Why's that important? Because flattening out is what we need before we can see a cyclical turnaround -- in other words, where even in the hardest hit local markets in California, Florida, Arizona and Nevada, prices have hit bottom.

They're not likely to drop much further, and in some parts of California are now at such bargain levels that large investors are prospecting for entire packages of houses -- ten or more in some cases -- to buy in bulk and rent out.

Gary Crabtree, an appraiser in Bakersfield, California, told Realty Times that he knows of one investor who has a standing order for 20 houses that fit specific price and locational characteristics that he wants to purchase.

The National Association of Realtors sees similar bottoming out -- even the first signs of turnaround -- in a number of key markets in the U.S. In its latest quarterly report, home sales were up year-to-year in 26 percent of all states and 35 percent of metropolitan statistical areas.

Biggest price jumps were in Yakima, Washington, where the median was up 8.9 percent, Binghampton, New York, up 8.7 percent, and Amarillo, Texas, up by 7.2 percent.

On the other hand, the Realtors also reported the national median sales price was down by 7.6 percent from the second quarter of 2007, and now stands at $206,500.

In other key economic developments: New housing starts fell by three percent last month - which is only logical given builders' still bulging unsold inventories.

And mortgage rates took a dip this week to an average 6.47 percent for 30 year fixed. Fifteen year rates slipped below 6 percent to 5.99 percent. New loan applications for FHA mortgages to purchase homes rose slightly, according to the Mortgage Bankers Association of America -- even while applications for conventional home purchase mortgages from Fannie Mae and Freddie Mac dropped for the week.

Published: August 26, 2008

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Kenneth R. Harney writes an award-winning, nationally-syndicated column on housing and real estate from Washington, D.C. He is also managing director of the National Real Estate Development Center, a professional education company. He is a past member of the Federal Reserve Board's Consumer Advisory Council, a committee that by federal statute reviews all Fed actions on home mortgage, consmer credit and banking industry regulation. He served as a member of the U.S. Department of Housing and Urban Development's Working Group on Computerized Loan Origination (CLO) systems, and is a member of the Editorial Board of the Fannie Mae Foundation's journal, Housing Policy Debate. He is the author of two books on mortgage finance and real estate.