Buyers cautiously sniffing housing market

updated 2:45 p.m. ET April 26, 2009

With white tin ceilings, original woodwork, bay windows, and a $699,000 price tag, the two-bedroom apartment at 719 Carroll St. in Brooklyn would have been snatched up in a New York minute a couple of years ago.

Instead, it's been on the market for more than two months. On a recent spring weekend 14 buyers came through, and still no bids.

"We're in the early stages of the search," said Joanna Brett, 33, as she checked out the apartment with Sarah Madigan. "We've been looking on and off for six months."

Welcome to the spring selling season.

The number of house hunters out this spring is an encouraging sign that the real estate market is beginning to turn around. There's just one problem — a lot of them are in no hurry to buy, according to interviews with dozens of shoppers at open houses last weekend.

The market's turning point will be tough to predict, because it will be gradual and obscured by conflicting signs like recent housing reports that showed sales of previously occupied homes fell 3 percent from February to March, while new home sales seemed to have bottomed out.

Even more puzzling for homebuyers, economists expect sales volumes to recover at least six months before home prices stabilize.

"Prices will continue to fall sharply this spring and summer and will stabilize at year's end," said Mark Zandi, chief economist for Moody's Economy.com.

In March, the median price for a new home dropped 12 percent from a year ago to $201,400, and the price tag for a previously owned home also fell 12 percent to $168,200.

Video   Low prices empowering new homebuyers April 19: In former boomtowns across America, first-time homebuyers are being spurred by formerly unimaginable prices – and a new $8,000 tax credit. NBC’s Michelle Kosinski reports. Nightly News

The real estate crisis, fueled by reckless lending and borrowing from 2001 through 2006, triggered not only the U.S. recession but also a global financial meltdown. And the nascent signs of recovery in the housing market could be short-lived if employers continue to lay off staff in bulk.

The speed of real estate recovery also varies by region. Since February, sales volumes have been trending upward at different rates in 50 major metro areas tracked in The Associated Press-Re/Max Monthly Housing Report. The report includes transactions from all real estate agents in the metro areas, regardless of company affiliation.

Compared with March of last year, sales are only up in 10 cities — all of them saturated with deeply discounted foreclosures. In San Diego, Los Angeles, Phoenix, Las Vegas, Miami and Orlando, Fla., for example, sales volumes are up at least 50 percent over last year.

"A quarter of the purchases this year in Vegas have been cash purchases, so that's crazy," said Craig Stott, a real estate agent with Coldwell Banker Premier Realty. "You have a lot of investors back in the market."

Home values in Sin City have cratered by 50 percent since their peak. And that has made buyers like Erik Sandu cautious.

"I'm not sure that we've hit (bottom) yet," Sandu, a 37-year-old advertising executive, said while checking out a $525,000 five-bedroom house in Las Vegas.

In a few markets around the country, sales are still deteriorating. Detroit and Cleveland, Ohio, where there is an exodus of unemployed auto workers, are among them.

Home sales also reversed course last month in Fargo, N.D., where sandbags were taller than for-sale signs after the Red River busted over its banks.

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