Housing market may have turned a pivotal corner

By Julie Haviv - Analysis

NEW YORK (Reuters) - The coast-to-coast fire sale in the U.S. housing market appears at long last to have caught a bit of a bid.

Yes, residential real estate remains in the throes of the worst downturn since the Great Depression. Yes, home prices are the lowest in six years and still falling. And yes, it still takes three quarters of a year to sell a house.

Nevertheless, the market may have turned a pivotal corner last month, if a surprising increase in existing home sales is any guide.

Until now, plunging home prices have been keeping many potential home buyers at bay because they were leery of buying an asset that was all but guaranteed to lose value, at least initially.

Now, though, prices appear to have fallen enough in some regions to make buying cheaper than renting, particularly in the West. Add with record low mortgage rates, demand has started to rebound.

"You can now own a home in several areas for less than it costs to rent," said Mollie Carmichael, senior vice president with John Burns Real Estate Consulting, an Irvine, California-based consultant to the real estate industry.

In Southern California, home sales jumped 50.5 percent from the year earlier as median prices fell 34.6 percent to $278,000 and buyers snapped up foreclosed properties, MDA DataQuick said last week.

Home prices have dropped so much in some areas of California that monthly mortgage payments on single-family detached homes are comparable to apartment rents.