Nationwide, existing home sales inched upward in November. But is it a sign that the market is stabilizing?

Sales rose 0.4 percent to a seasonally adjusted annual rate of 5 million units but were still down 20 percent from November 2006, according to the National Association of Realtors.

The association says that the modest increase is a sign that the housing market is leveling out after months of turmoil stemming from the credit crunch.

“Mortgage interest rates are near historic lows and the most current data shows decelerating price declines, along with a modest reduction in the number of homes on the market,” the group’s senior economist Lawrence Yun said in a statement.

But local real estate agents and industry analysts seem to think 2008 will bring more price drops in neighborhoods around the Valley.

More than 50,000 existing homes are still on the market, and that doesn’t include the overabundance of new homes still out there.  That supply will have to come down and balance with demand before recovery becomes a reality. And that means sellers will either need to take their homes off the market or lower prices.

Legislation signed into law this week will help ease the tax burden on homeowners who have had debt forgiven on their mortgages because of a foreclosure, short sale or deed in lieu of foreclosure.

Up until now, the amount of forgiven debt was considered taxable income — a huge hit to borrowers already in dire financial straights.

The Mortgage Forgiveness Debt Relief Act ensures that any debt forgiven on a mortgage for a principal residence won’t be taxed.

The Valley’s average apartment rent hit a record high in the third quarter of this year at $773, but rents are no longer growing at a breakneck pace.

That’s according to a new report by apartment market expert Pete TeKampe at brokerage Marcus & Millichap.

The average rent increased only $5 from the previous quarter, the second smallest quarter-to-quarter increase since early 2005, according to TeKampe.  Meanwhile, 62 percent of apartment complexes were offering concessions, such as a month’s free rent, in the third quarter, compared with only 43 percent a year ago.

The rental market’s slowing growth is caused in part by a surge in the supply of units. Apartments converted to condominiums during the boom have now been turned back into rentals. And frustrated home sellers are renting out their houses.

Building permits for new homes were at a seasonally adjusted annual rate of roughly 1.15 million in November, a 1.5 percent drop from the previous month and 25 percent fall from the same time last year, a report from the U.S. Department of Commerce shows.

The number of homes started across the nation also dropped last month. Housing starts were at a seasonally adjusted annual rate of about 1.19 million, down 3.7 percent from October and sagging 24 percent from November 2006.

The number of new foreclosure filings reported in Arizona fell for the third month in a row in November. But will it last?

A total of 5,767 foreclosure filings — including default notices, auction sale notices and bank repossessions — were reported statewide last month, according to national research firm RealtyTrac. That’s a 9 percent drop from October but still marks a nearly 90 percent increase from the same month last year.

Nationwide, there were 201,950 foreclosure filings in November, a 10 percent decrease from the previous month but a nearly 68 percent rise from a year ago.

The 10 percent drop was the first double-digit monthly decline since April 2006, according to RealtyTrac.

“This could indicate that foreclosure activity has topped out for the year, but the true test of whether this ceiling will hold will come at the beginning of next year — when we anticipate that a seasonal surge in foreclosure filings and another possible wave of resetting mortgages could place further pressure on the housing market,” RealtyTrac CEO James Saccacio said in a statement.

Arizona ranked No. 8 on a list of the nation’s highest foreclosure rates. The top 10 also included Nevada, Florida, Ohio, Colorado, California, Michigan, Georgia, Indiana and Illinois.

Builder confidence in the housing market last month remained at its lowest point in more than 20 years.

The national Housing Market Index, which measures builder perceptions, remained unchanged in December for the third month in a row as builders continued to worry about mortgage market problems and an excess supply of homes, the National Association of Home Builders reported.

“At this point, many builders are bracing themselves for the winter months when home buying traditionally slows, scaling down their inventories and repositioning themselves for the time when market conditions can support an upswing in building activity — most likely by the second half of 2008,” association chief economist David Seiders said in a statement.

The NAHB/Wells Fargo Housing Market Index began in January 1985 and gauges builder perceptions of current single-family home sales, sales expectations for the next six months and prospective buyer interest.

The number of Americans falling behind on their home loans has hit its highest point since 1986, according to a new Mortgage Bankers Association survey.

In the third quarter 2007, the mortgage delinquency rate on one-to-four unit residential units was 5.59 percent of all outstanding loans. Meanwhile, the percentage of loans in the foreclosure process was 1.69 percent of all outstanding loans and the rate of loans entering the foreclosure process was 0.78 percent, the National Delinquency Survey shows.

Plagued with huge supplies of homes and overinflated prices, Florida and California are the two largest states in terms of outstanding mortgages and have largely driven the rise in national foreclosure rates.