End of US housing slump? Maybe not.

Debra Taylor Blair feels a new optimism, a budding hopefulness that is shared by many who track the real estate market: The worst of the current housing slump, she believes, may be over.

As president of a real estate information company in Boston, she tracks sales of condominiums in the downtown area. Last week she saw a turn for the better. Her firm found that in the most recent quarter, both sales volume and prices were up from the same period a year earlier. That came after two years of declining sales and a dip, for 2006, in the median price.

Could the housing crunch finally be easing?

"I ask myself that every five minutes," says Ms. Taylor Blair, of Listing Information Network. The latest report "shows the possibility that we're just coming out of the housing recession."

Although Boston is probably ahead of other big cities, the season of hope here is mirrored nationwide. Some economists believe the worst has passed, and most say they believe the housing downturn will bottom out some time during 2007.

But that forecast is a matter of hot debate, with implications for homeowners, home buyers, and the health of the economy. Some analysts say the downturn still has a long way to go. Homes are still priced out of reach for too many buyers, they say, and many more people want to sell homes than want to buy.

Moreover, even if the market does "hit bottom" by midyear, housing could remain in a challenging slow patch well into 2008.

"Inventory is a challenge," says Phillip Neuhart, an economist at Wachovia Corp., a banking and investment firm based in Charlotte, N.C. "It's classic supply and demand."

Like many economists, he reckons that the trough for this housing cycle will come around midyear.

But that low point will involve an additional cutback in home building, he predicts, because builders got ahead of the demand during the past few years. And, he adds, this low point will be followed by an extended period during which prices may rise only modestly. Following the recession of 1990-91, for example, it took until 1997 before home prices began to post annualized growth rates above 3 percent.

Still, some of the recent signs in housing are positive. A week ago, the National Association of Realtors reported that the number of pending contracts to sell existing homes rose 5 percent in December.

"Some of the monthly gain may be weather related, but it appears buyers are becoming more comfortable, sensing the timing is good and that their local market has bottomed out," says David Lereah, the association's economist. "I expect modest sales gains throughout the year."

And, Neuhart notes, in the new-home market, inventories have fallen for five straight months. The level of excess supply remains large, but "declines are declines, and that's what we like to see" in the number of unsold homes, he says.

The question is when a new balance will be reached between supply and demand. The housing slowdown is unusual because it has not come amid a general economic decline. Rather, it appears that home prices simply rose to a point where fewer buyers could afford homes.

By last year, a median-priced American home cost nearly eight times average annual earnings, up from about five times earnings in 1980, according to research by New York investment firm Merrill Lynch.

Now, fewer buyers can afford homes, and many speculators are trying to clear out of a cooling market.

The result is an excess supply of some 1.5 million units, in a market where 8 million homes are sold in a good year, according to a new estimate by Goldman Sachs, an investment firm in New York.

That tally includes the stock of homes listed as being for sale, plus an adjustment for the high number of canceled purchase contracts for new homes. It also takes into account a sharp rise in the number of existing homes that are vacant.

The number of unoccupied homes for sale has reached a record 2.7 percent of all homes that are normally owner occupied. The upshot: Builders may need to cut the pace of construction even further, and prices for homes may face continued pressure.

But many analysts don't buy into the bearish view. They say that, with interest rates still relatively low and credit available, homebuyers are starting to dip their toes back into the market. That could help mop up excess supply.

Carl Tannenbaum, chief economist at LaSalle Bank in Chicago, goes a step further. He hypothesizes that the current downturn may prove to be much quicker than in the past. The Internet and new information services may be helping both buyers and sellers find balance faster than in the past.

"There's a reasonable chance," he says, "that we're closer to the bottom than a lot of people think."