Recent data illustrating steady house prices and rising sales for weeks have led economists and analysts alike to indicate a perceived bottom — or stabilization, at the least — in the US housing market. New market analysis out of Credit Suisse (CS) suggests the US residential housing sector may be past the point of stabilization and is now recovering vital signs. Demand is returning on higher affordability and the federal first-time homebuyer tax credit, according to Martin Bernhard, of Credit Suisse’s private banking, investment services and products divisions. “On a national level, we think that the turning point could have been reached,” he said. But several factors including unemployment rates and foreclosure levels post-moratoria may pressure these positive developments, Bernhard said in market commentary last week. The US unemployment rate rose to 9.7% in August, posing an ongoing risk to the recovering in housing demand as consumers remain financially pressured. New house supply is low as housing construction slips. Weak demand for new houses may reduce inventory in the months ahead, Bernhard said. The existing house side of the market — which is about 10 times as large as the market for new homes, according to Credit Suisse — remains pressured by levels of foreclosure inventory. Foreclosure sales, which weigh on overall resale house prices, may further depress the market. The risks posed by the foreclosure pipeline may pressure prices in the short term, but the pricing correction achieved poses long-term investment benefits. “Given the sharp correction in house prices over the last three years, we think that there now exist interesting investment opportunities in the US housing sector,” Bernhard said. “But risks remain due to rising unemployment and foreclosure sales. We thus recommend investors to concentrate on regions with relative robust housing market fundamentals and positive long-term outlooks such as Texas.” Other regional US existing home markets where increasing levels of supply outweigh weak demand may not bottom quite so early. Overall US financials continue to appear strong, however. The US Q209 earnings season surprised global financial market observers, contributing to an overall expectation that the global recession is nearing an end. Substantial capital injections by government or the private sector revitalized the banking industry in the US and around the globe since the beginning of 2009, according to Giles Keating, head of the Credit Suisse global economics and strategy group. Write to Diana Golobay.