February's existing home sales rate was 5.03 million - up 2.9% from January's rate of 4.89 million, but still down 24% from a year ago. However, the slight uptick from last month's low could indicate a bottom. February's median resale home price was down 8.2% from last year, and is now at $195,900. (National Association of Realtors, Existing Home Sales Rise in February, March 24, 2008)

Similarly, the increase in foreclosures (though still very high) seems to be plateauing. February's foreclosures were up 60% year-over-year - about the same as January's 57% foreclosure increase, but much better than the 97% increase seen in December. (Source: RealtyTrac.com, Foreclosure Activity Decreases 4% in February, March 13, 2008)

Although this doesn't mean that the pain is over, it does mean that it might be stabilizing. That's because of several reasons:

1. Although home prices have fallen in the last year, the lower prices are now drawing buyers into the market, a sign that the market is stabilizing.
2. The inventory of homes for sale is decreasing from a 10.2 month supply in January to a 9.6 month supply in February.
3. Interest rates are lower - a 30-year conventional loan was at 5.92% compared to 6.29% last February.

What It Means to You

If price declines were to follow sales declines, it would compare to the 24% decline experienced during the Great Depression of 1929. Prices probably won't fall as far, however, since low prices are already drawing buyers back into the market.

However, we aren't out of the woods yet. Real estate contributes 10% to the economy, so GDP will suffer. Watch for the Final GDP Report, due March 27th to see if the economy is in further danger of a recession.The housing decline has already caused a significant stock market correction, although it hasn't yet reached a bear market.

More on Real Estate and the Economy

• How Does Real Estate Affect the U.S. Economy?
• Definitions of Commonly Used Real Estate Terms
• A Primer on Interest Rates

If you are selling your home, here are some great tips from the About.com guide to Homes, Elizabeth Weintraub.

• Selling in a Falling Market
• Avoid Mistakes When Selling in a Slow Market
• When Is the Time Right to Reduce Price?