Real estate market may be improving

Home purchase activity rebounded last week, suggesting that the residential real estate market is slowly beginning to improve.

The Mortgage Bankers Association reported Wednesday that purchase applications rose 9 percent last week. The previous week had seen purchase-loan activity decline to a near-13-year low as consumers continued to retrench and avoided taking on new mortgage debt.

But consumers’ chilly market outlook may be thawing.

According to foreclosure marketplace RealtyTrac, the number of foreclosed properties listed for sale dropped 10 percent between December and January. Especially in markets hard-hit by the real-estate downturn, the picture appears to be getting better: In California and Florida, foreclosure activity fell by double-digit percentages.

And most foreclosure activity is still concentrated in a small number of states: Six states, RealtyTrac reported, accounted for almost 60 percent of all filings in January.

Some real estate market watchers caution that a "shadow inventory" of foreclosures could emerge in the coming months as more homeowners default on their loans: Barclays Capital calls it an "overhang" of distressed-property inventory.

But the real estate market appears to be returning slowly to health, and consumers’ confidence in the value of their homes may get stronger in the coming months.

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