Positive economic indicators have economists expressing cautious optimism for the housing market in the year ahead. As the year ends, housing prices appear to have stabilized, supply is on the decline, and banks are beginning to loosen lending standards. According to a fourth-quarter report from Capital Economics, distressed home prices, which contribute to the downward pressure on values, have fallen just 0.5 percent in the last year and housing inventory has dropped 20 percent. Combined with the fact that, since the height of the housing boom, prices have dropped 33 percent, Capital Economics says prices have reached a bottom, though they don’t foresee an immediate and dramatic jump in the new year. More here.