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During the forth quarter, home prices dropped it’s smallest decline in 2 years. Home prices fell 1.2 percent. Experts believe the homebuyer tax credit is boosting demand.

Home prices are down 0.1 percent from the third quarter, according to the Federal Housing Finance Agency. Home prices are only down 1.1 percent from 2007’s forth quarter.

Many government programs has helped the real estate market, such as, the homebuyer tax credit and the Federal Reserves Program to buy mortgage backed bonds to keep interest rates low. The housing market still is threatened by the high amount of forecloses and the high unemployment rate.

“The government programs have helped to stabilize housing, but the market is still unbelievably fragile,” Lawler said in an interview. “Nobody knows what’s going to happen to all those properties in the foreclosure process.”

According to the National Association of Realtors, during the forth quarter sales of existing homes increased by 14 percent to an annual rate of 6.03 million from 5.29 million in the last 3 months.

In November, President Barack Obama extended the homebuyer tax credit. The tax credit still lets first time homebuyers be eligible for the $8,000 credit and a smaller credit is also available for move-up buyers. In order for homebuyers to qualify for the credit they must have a signed contract on a property by the end of April and purchase the home by July 1.

Last year the Fed purchased $1.25 trillion of bonds backed by home loans to help lower mortgage rates. Mortgage rates have dropped as low as 4.71 percent.

During the fourth quarter the U.S economy grew at a 5.7 annual pace, which is the fastest in six years. In January, industrial production rose 0.9 percent according to Federal data.