They're not overwhelming yet, but definite signs of improvement continue to pop up in real estate around the country.

Take the latest home resale report: Sales were up by 2 percent nationally in May, and up 5.5 in the Midwest and 4.6 percent in the Northeast.

Condo sales also jumped 5.5 percent nationwide.

Sales of existing homes were up even in some of the hardest hit local markets -- Sarasota on the Gulf Coast of Florida, for example, and Sacramento California and Battle Creek Michigan.

Big deal! You might say in response. A lot of that activity is attributable to severely depressed home prices, short sales, and banks dumping foreclosures.

No question that's true. But the down cycle has to stop somewhere, and in the toughest local markets that means deeply-discounted and distressed properties coming out of foreclosure now look like excellent deals to bargain hunters.

So yes absolutely: Houses with slashed prices are selling fast and pushing up sales numbers. That's the way cycles work. The cyclical rebound gets rolling on the wreckage left over from the boom.

But there are other signs of light as well: The federal government agency that tracks home price movements -- based on multiple sales of houses financed by Fannie Mae and Freddie Mac -- found home values actually increased in two major regions in the U.S. last month.

Prices continue to rise in Texas, Louisiana, Arkansas, Oklahoma, Kentucky, Tennessee and Mississippi. Dozens of metropolitan markets in the mid section of the country never participated in the boom, and they are showing steady increases in prices.

Still another plus: Mortgage rates took a surprise dip last week -- reversing the previous week's sharp increases. Thirty year fixed rate loans are back down to 6.4 percent and fifteen year rates are under six percent again.

And here's one more positive sign to add to the mix: Personal consumption -- an important indicator of the economy's underlying rate of expansion -- rose by four tenths of a percent in May. That's the largest gain since December of 2006.

Are developments like these enough to push us into a full blown housing recovery or keep us out of recession? Not by themselves. But keep your eyes on home sales and prices in the hardest hit local markets. If enough of them start going positive -- then yes, we could be on the verge of a turnaround in the months ahead.

Published: July 3, 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.