Mortgage rates have hit record lows. You can get a 30 year fixed-rate mortgage for 4.85%. The 15 year is at 4.58%. I don’t think mortgages have ever been this cheap. According to Frank Nothaft, Freddie Mac chief economist, “The Federal Reserve’s announcement that it intends to purchase Treasury securities over the next six months caused bond yields to drop and mortgage rates followed.”

Meanwhile, home sales are up for the 2nd month in a row. Some people think this is a sign of a stabilizing of the housing market and higher prices are likely to follow.

So are home prices really bottoming out? Some of the things to consider are

• Foreclosures made up a significant portion of all home sales.
• Prices are still dropping.
• There is significant inventory overhang in many markets
• Banks haven’t listed a lot of foreclosed properties for sale yet, mainly to prevent this supply from further depressing prices
• A large number of ARMs are adjusting next year. This might cause the whole cycle to repeat and prices to fall further.
• It’s becoming more difficult to qualify for a home loan and the days of 100% or 105% financing are gone.

And if you think higher home prices are on the horizon, check out these real estate prices.