U.S. home prices may have fallen in December to their lowest since the market fell apart in 2006, but that doesn’t mean that shining through the continuing anxiety surrounding housing there aren’t some glimmers of hope, a number of housing experts said this week.

To be sure, mortgage loans continue to be hard to come by and joblessness remains stubbornly high, but certain crucial data points, such as rising new household formation and unusually low housing starts suggest a bottom could indeed be near for the housing market.

And, while a turnaround in housing is deemed crucial for the economic recovery from the worst downturn since the 1930s to morph into a bona fide expansion, uncertainty remains the overriding factor defining the housing market today.

“We might be on the verge of recovery, but maybe not,” Prof. Robert Shiller of Yale University and one of the brains behind the S&P/Case-Shiller Home Price index series, said in a news conference call following the release of the latest housing data.

Equivocations notwithstanding, Shiller conceded he’s more optimistic about the future of housing today than he was a year ago, when he called the market “vulnerable” and highlighted the possibility of home prices dropping “substantially.”

Improvement in indicators such as unemployment rates and demand for homes, even if small, fuel Shiller’s cautious optimism, even as he described the current state of the U.S. housing market as “queasy.”

Shiller said that although many consider current housing prices as good long-term buying opportunities, U.S. consumers are still leery about the overall state of the economy and remain slow to commit to purchasing a house.

“Expectations are a major driver of the market, and people aren’t that excited yet,” he said, noting that an improvement in consumer sentiment could lift the market out of its doldrums.

Murky Waters

Analysts are indeed faced with a mixed bag of indicators that range from objective and encouraging data such as low housing starts to subtler and more subjective consumer sentiment surveys. Together they fail to provide clear direction.

The segmentation of the housing market adds to the difficulty of pinpointing market direction as the low-income, mid-income and high-income segments of the residential real estate market behave differently, Karl Case, founding partner of Fiserv Case Shiller Weiss Inc., said during the conference call.

From a historical perspective, the mid-1990s to 2006 home price boom was out of proportion with home price action seen in previous years. The sharp decline that followed that exceptional boom was equally dramatic, with home prices on a national level today still more than a third off their 2006 highs.

Still, a look at the charts suggests that while continued weakness could be in the cards, home prices have in fact been tightly range-bound for at least two years. Factors holding back property prices are: the high unemployment rate; general concern about the fragility of the economy; and difficulty in getting mortgage loans.

A Change In The Way We View Housing

Case added that the latest cycle in housing has caused a permanent change in the way people view home ownership.

That taken-for-granted optimism that home prices could only go up has been replaced by the realization that that’s not always the case.

“The idea of the American dream became a nightmare,” Case said of the downturn in housing. “People now know that home prices can fall.”

That’s not to say that they will fall, Case added.

While housing starts (the supply side of the equation) remain historically tight with the building of homes at its lowest level in many years, household formation (the measure of demand) has picked up significantly since March 2011.

“I’m not trying to gloss over the numbers, but there are some bright spots,” Case concluded.