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Smaller Cities Leading the Rebound
CNBC.com | March 30, 2012 | 12:51 PM EDT

It’s not ready to get discharged from the hospital yet, but it’s out of the ICU.

Thus describes the Midwest housing market, parts of which suffered mightily during the collapse that began in 2006 , says David Blitzer, managing director and chairman of the S&P/Case-Shiller Home Price Index , which tracks 20 major U.S. metro markets.

“Prices in the Midwest are still not on an upswing,” says Blitzer. “They are falling and continue to fall, but prices are always one of the last things that turn up.”

He notes that the increase in home sales and housing starts over the last year is bringing inventory levels back in line, as rock-bottom interest rates and growing consumer confidence encourage buyers to get off the fence.

“Hopefully, we’ll see prices start to turn up sometime this year, but that hasn’t happened yet,” says Blitzer.

According to the National Association of Realtors , existing home sales in the heartland increased 7 percent in the fourth quarter of 2011 over the prior three-month period. They ended the year 14 percent higher than in 2010.

That’s slightly better than nationwide figures, which were up nearly 6 percent in the fourth quarter over the prior quarter, and 9.2 percent for the year.

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