ome prices were trending up in 155 out of 384 metro areas in the fourth quarter of last year, including in markets in Ohio and Michigan, Fiserv Inc. reports, based on its analysis of the Fiserv Case-Shiller Indexes. Despite the positive performance in these regional markets from recent lows, average U.S. home prices were down 2.5% from the fourth quarter of 2008, which can be attributed to the continued high level of unemployment, rising interest rates and the large number of distressed properties that remain in markets such as Florida, Arizona and Nevada. "Optimism that a sustainable economic recovery is under way is driving increases in home prices across many U.S. metro areas,’ comments Dave Stiff, chief economist for Fiserv. ‘More and more, consumers have confidence that buying a home doesn't mean catching a falling knife. Very large price declines have also made housing much more affordable, drawing in both first-time home buyers and investors." Ohio and Michigan – two states hit hard by the recession and the loss of manufacturing jobs – are seeing signs of stabilization, with housing very affordable across metro areas in these states. There is less uncertainty about the future of the U.S. auto industry, and jobs in auto and auto parts manufacturing have been increasing since December 2009, Fiserv notes. Other markets where investor purchases of foreclosed homes have dominated housing sales are also coming back into balance. These markets include metro areas such as Minneapolis, Detroit and Memphis, Tenn., where recent sales have included more regular, nondistressed homes. Relative to bubble-era prices, California markets – which collapsed about one full year before must of the rest of the U.S. – have seen the greatest improvement in housing affordability, Fiserv says. From the fourth quarter of 2008 to the fourth quarter of last year, prices rose in eight of 28 California metro areas and have increased from recent lows in 24 of 28 metro areas. The strongest rebounds were in coastal markets, including the Bay Area, Los Angeles, Orange County and San Diego, where there are decreasing levels of foreclosed homes. Markets in the interior have also experienced a price bounce, mainly due to strong investor demand. In Washington, D.C., meanwhile, home prices were up 5.2% year-over-year. Since the market bottom in early 2009, prices in this metro area have risen by more than 9%. Washington boasts a relatively strong local economy, with 6.8% unemployment (compared to 9.9% for the U.S.). The earlier rapid decline in prices also substantially improved affordability, Fiserv says. However, Stiff warns there will be renewed downward pressure on home prices. "The first-time home buyer tax credit has expired, the Federal Reserve has stopped buying residential mortgage-backed securities and the projected number of foreclosures remains extremely high,’ he says. ‘As a result, markets with recent price increases may see small price declines before prices finally stabilize at the end of this year or early 2011." Over the past year, the U.S. housing market continued its price correction, with single-family home prices across the U.S. falling an average of 2.5% over the 12-month period ending Dec. 31, 2009. The Fiserv Case-Shiller Indexes forecast that average single-family home prices will fall another 3.1% over the next 12 months. Steep home-price declines are expected to continue in markets that have been hurt most by the housing crisis. From the fourth quarter of 2009 through the fourth quarter of 2010, average home prices in Nevada, Arizona and Florida are projected to decline 9.2%, 9.5% and 7.7%, respectively. SOURCE: [link=http://investors.fiserv.com/releasedetail.cfm?ReleaseID=479077]Fiserv