A new report from the Standard and Poor's / Case Shiller Home Price Index indicates reason for optimism. Maybe cautious optimism is a better term. Cautious, because the average rate of change in prices over the twenty cities sampled is still slightly negative. Cautious, also, because the summary level of this data doesn't reflect the wide variability behind the summary - some cities are doing much better than others. That said—just look at the curve in this graph. By late 2009 the price changes were only negative by about 4%—up dramatically from mid-2008, when they approached -20%. If the trend continues, we will be flat before long, and heading back into growth. Does past performance guarantee future results? Of course not. But I can't help but feel optimism looking at this trend. Cautious? Certainly. But, optimism, nevertheless.

[click to enlarge graph]