First, the good news: Home sales have stabilized over the last seven months and are expected to increase measurably in the rest of 2008. And the subprime lending crisis is almost past; the balance of this year will be about cleaning up that mess.

The bad news is that the current annualized sales pace of about 5 million existing homes is the lowest in 10 years. Luckily, the economy has over 10 million more jobs than 10 years ago, so sales should begin to grow later this year and continue into 2009, when sales should climb to 5.71 million units.

Prices also are expected to improve this year. Cities that performed evenly over the past few years like Cincinnati are likely to experience home price gains in the 20 percent to 30 percent range over the next five years, while formerly hot markets like Miami could see prices go up by as much as 50 percent during that period, after having adjusted downward this year.

These markets should get a boost from a more stable mortgage environment. FHA lending, which accounted for only 3 percent of loan originations in 2007, should grow to 10 percent in 2008 before reaching near-historic norms of 15 percent in 2009.

Higher conforming loan limits at Fannie Mae and Freddie Mac also are helping. With high-cost limits now at $729,750, interest rates on formerly jumbo-sized loans are easing.

Even borrowers with adjustable mortgages are in better shape, thanks to Fed rate cuts. Some adjustable loan borrowers might actually see their resets produce lower payments.

There are other reasons for optimism, including the home buyer tax credit that’s passed both the House and the Senate. It would give buyers an incentive to get off the fence.

So, even though we’re not out of the woods yet, by many signs we’ve put the worst behind us.