While the housing collapse continues, with residential construction likely to decline for the remainder of 2008, there are reasons for optimism that the pace should soon begin to subside. Since peaking in 2Q 2006, the Case-Shiller national housing price index has fallen 16.2%. With reference to the long-run relationship between rents and home prices, roughly an additional 15% decline in home prices should be expected.

Bay Area home sales climbed nearly 30 percent from March to April, the first monthly gain in half a year as financing became easier to secure and shoppers took advantage of bargains, according to a research firm.From a year ago, however, sales were still down 15.3 percent, according to DataQuick Information Systems of La Jolla (La Jolla County).

There were month-over-month sales increases in February, March, May and October of last year, none of which presaged an overall strengthening of the market.

After slipping 0.7% in February (revised from a preliminary estimate of a 0.6% decline), housing starts tumbled 11.9% in March to 947,000 units. After two consecutive months of sharp gains, there was a large decline in the highly volatile multi-family starts category. Single-family starts fell for the twelfth consecutive month. The median of analysts’ projections (as surveyed by Bloomberg) was for total starts of 1.01 million. Note that there were minor upward revisions to starts in January and February. For the third consecutive quarter, housing starts fell at a better than 30% annualized rate. The first quarter average for housing starts is down an annualized 34.5% versus the fourth quarter average. This result indicates that residential investment will again be a significant drag on 1Q real GDP growth.

WASHINGTON (AP) — The Senate on Thursday passed a bipartisan package of tax breaks and other steps designed to help businesses and homeowners weather the housing crisis.

The measure passed by an impressive 84-12 vote, but even supporters of it acknowledge it’s tilted too much in favor of businesses like homebuilders and does little to help borrowers at risk of losing their homes.

The plan combines large tax breaks for homebuilders and a $7,000 tax credit for people who buy foreclosed properties, as well as $4 billion in grants for communities to buy and fix up abandoned homes.

An industry group said Tuesday that pending U.S. home sales fell in February to the lowest reading since the index began, signaling the housing market distress is not yet over.

The National Association of Realtors’ seasonally adjusted index of pending sales for existing homes fell to 84.6 from January’s upwardly revised reading of 86.2. The index stood at 107.6 in February 2007.

Wall Street economists surveyed by Thomson/IFR had predicted the index would inch up to a reading of 86.3.

A reading of 100 is equal to the average level of sales activity in 2001, when the index started. The previous low was August’s reading of 85.8, recorded at the height of the credit crunch.