Despite continued worries of an economic recession, February has turned out to be a good month for home builders, who have seen more foot traffic through subdivisions in recent weeks.

The latest Housing Market Index from the National Association of Home Builders and Wells Fargo showed a slight up tick this month. The index gauges builder perceptions of current sales, sales expectations for the next six months and buyer interest.

That rise in hope has been reflected in the Valley recently.

Builders say more people are walking into sales offices. But buyers aren’t necessarily biting with some coming to look at houses half a dozen times or more.

Some buyers who have been sitting on the sidelines are now at least investigating their options given improved housing affordability and a wide variety of homes to choose from, said David Seiders, chief economist for the national builders association.

“That said, builders know there’s a difference between people looking and people buying, and their current outlook remains quite subdued,” Seiders said.

The average rate for a 30-year fixed-rate mortgage rose to 5.72 percent this week, up from 5.67 percent a week ago, a new survey from mortgage giant Freddie Mac shows. A year ago, that rate was 6.30 percent.

At the same time, the 5-year adjustable-rate mortgage fell to 5.19 percent from 5.21 percent last week.

Recent releases of economic data have painted a mixed picture of what’s happening in the economy, Freddie Mac chief economist Frank Nothaft said in a statement.

Labor productivity rose higher than expected in the last three months of 2007, but pending sales of existing homes fell for the second month in a row in December, Nothaft said.

Historically low mortgage rates and falling home prices have improved housing affordability, he said. “However, with banks continuing to tighten lending standards, fewer families will likely have an opportunity to take advantage of these factors.”

A new survey shows that more than two-thirds of Arizona residents living in homeowner associations say they feel it has a positive impact on property values, according to the Arizona Association of Community Managers. The study polled 1,063 Arizona residents last summer.

Some 74 percent of homeowners said they feel community regulations have a positive impact on values. And 86 percent said they believe that their boards of directors try to do what’s best for the communities.

Arizona has more than 8,600 HOAs, representing more than 1.2 million homes, according to the report. The  association’s members manage more than $178 billion in property valus statewide.

A total of 56,040 foreclosure filings — including default notices, auction sale notices and bank repossessions — were reported in the Valley last year, up 177 percent from 2006, according to a report by mortgage research firm RealtyTrac. That means 1.9 percent of all Valley households entered some stage of foreclosure.

But the Valley’s foreclosure woes could be worse.

Detroit, Stockton, Calif. and Las Vegas had the three highest foreclosure rates in the nation, the study shows. Some 4.9 percent of Detroit households entered foreclosure — roughly five times the national average of 1.03 percent. The Valley came in at No. 22 on the list of metropolitan area foreclosure rates.

The top 10 also included: California’s Riverside, Stockton, Sacramento and Bakersfield, as well as Las Vegas, Cleveland, Miami, Denver and Fort Lauderdale, Fla.

Despite widespread price declines, more than 70 percent of homeowners polled for a recent national survey said they believe the value of their homes increased or remained the same last year.

“People either aren’t paying attention to their housing market or are in denial about their own home’s value,” said  Stan Humphries, vice president of data and analytics at Zillow.com.

Zillow’s online survey was conducted in December and includes views from 1,619 homeowners. About a third of owners polled said they thought their homes rose in value during 2007, while 41 percent said values stayed the same.

“This likely reflects the fact that most Americans have not realized home-related losses because they’re staying in their homes,” Humphries said in a statement.

“Even in declining markets where a greater percentage of new homeowners are underwater on their mortgage, it’s important to remember most people are not really affected by declining values unless they absolutely must sell or need to immediately refinance or withdraw equity.”

Disheartened home sellers and builders aren’t giving in just yet.

Entangled in one of the most competitive housing markets in recent memory, they’re veering off the beaten sales path and are giving home auctions a try.

In 2007, the real estate auction market generated $58.4 billion — remaining one of the fastest growing auction sectors, according to a new report from the National Auctioneers Association. Of that, residential real estate auctions saw the largest growth — rising 5.3 percent from 2006.

It’s a notable trend that has made its way to the Valley.

An Irvine-Calif. auction marketing firm hosted a massive auction in Mesa last fall, putting up nearly 100 houses for sale.

In January, brokerage firm AuctionAZ.com announced plans to hold as many as four home auctions a month with up to 40 Valley properties for sale at each event.

And later this month, Scottsdale-based builder Cachet Homes will auction off nearly 50 single-family homes, townhomes and condominiums in Buckeye and Flagstaff.

So, potential buyers keep a look out. There are some screaming deals to be had.

It’s a question no one can answer but everyone likes to guess at.

Many Valley experts I’ve talked with in recent months believe prices could bottom out later this year or in 2009 but that a full market recovery could take up to five years.

The latest forecast comes from Metrostudy, a consulting firm that tracks the national housing market. Builders are offloading excess homes, interest rates are near historic lows and prices could stabilize by mid-year, according to a report released this week by the research company.

“Home prices in many markets are as low today as they are likely to be for the next decade,” Metrostudy President Mike Inselmann said in a statement.

In the Valley, the number of homes started in the fourth quarter 2007 was down 32 percent compared with a year ago, the report shows. Sales were down 23 percent.

“The decline in starts is actually a positive for Phoenix, since builders need to deal with the excess inventory before bringing more homes onto the market,” said Ben Sage, director of the company’s Arizona division.

Despite a heavier focus on getting rid of inventory homes, the number of vacant finished homes rose in the final months of 2007 for the first time in three quarters to 9,875 units, according to Metrostudy.

Until supply comes into balance with demand for new and existing homes, experts say, the market will continue to suffer.

Thousands of Valley homeowners fell into foreclosure last month, and experts say the problem is likely to get worse before it gets better.

A total of roughly 5,300 properties entered foreclosure in January, compared with just 3,658 Valley home sales during the same period, according to local research data firm Information Market. Another just over 2,000 properties were actually foreclosed on. And more than 15,000 properties are currently in foreclosure, a new report from the company shows.

Experts say more foreclosures are on the horizon for the region as home prices continue to slide. Falling home prices have hit many families hard this past year. Many people with adjustable-rate mortgages have been unable to refinance because they owe the bank more than their homes are worth. Some are negotiating with lender to let them do a short sale - where the bank accepts less than what’s owed. Others are just walking away and letting their homes go into foreclosure.

Read more on Valley foreclosures here: “Number of homeowners who can’t afford payments escalates.”

You can also find a list of recent East Valley foreclosures by ZIP code at tribunehomefinder.com.

The parent company of Engle Homes, a top builder in the Valley, has filed for bankruptcy protection, citing the dramatic acceleration of the housing downturn in recent months.

Florida-based TOUSA Inc., also called Technical Olympic USA, said it received support from more than half of its senior creditors on a proposed plan to restructure its equity and debt through Chapter 11.

“There should not be any interruption in the construction of homes and our customers should not be affected,” company President Antonio Mon said in a statement.

Engle Homes, one of the company’s brands, ranked No. 8 in a recent list of the top 20 Valley builders, selling 1,320 homes in 2007, according to RL Brown Housing Reports. Engle has communities in Maricopa, Queen Creek, Gilbert and areas of the West Valley, including Vistancia and Verrado.

Borrowers and lenders stayed away from riskier loans in the final months of last year — opting for safer fixed-rate products, according to a new study out of the University of Pennsylvania’s Wharton School.

Applications for adjustable-rate mortgages slid 39.6 percent from January 2007 to the same time this year, according to the report by Susan Wachter, a real estate and finance professor. Meanwhile, fixed-rate loan applications jumped 60.1 percent.

The study also shows that borrowers who put down less than 20 percent are opting to get private mortgage insurance, or PMI, instead of piggyback loans. the number of people getting PMI rose 41 percent in the first nine months of 2007.