Welcome to the bottom: Part Four

Excerpts from an article by Adrian Sainz, David Twiddy, Daniel Wagner, Alex Veiga, AP

The Midwest

It's no surprise that the housing market and the auto industry are intertwined in Detroit, though, this is the first time anybody can remember that you can buy a home for less than the price of a new car.

But step out of devastated towns in Michigan, Ohio and Indiana and the housing market in the Midwest is showing some of the strongest signs of recovery in the country.

Thanks to places like the Dakotas, Iowa and Nebraska, the median sales price in the region rose almost 20% to an affordable $157,000 in June from January levels.

Sales of new homes jumped almost 38% in the first half of the year, which encouraged builders to get out their hammers. Construction, which was at a standstill in some communities, rose 86% on a seasonally adjusted basis, which accounts for typical variations in weather and other factors.

"New construction has been a good indicator for us in the past of what the general market is doing," says Chris Collins, president of the Kansas City Regional Association of Realtors. "Our new market is not what we've been used to but it's substantially better than other parts of the country."

The home resale market, however, remains weaker than the nation as a whole. That again can be blamed on the economy. The jobless rate in the Midwest is 10.2% compared with 9.5% nationally. And if you don't have a job you are not buying a house.

William Strauss, a senior economist for the Federal Reserve Bank of Chicago, cautioned that job cuts are still high in the region, and loss of income is the No. 1 reason homeowners default.

"We never got as bad as (other) states but nonetheless we still took a hit," he says, and the market remains "soft in the Midwest."

Midwest states: Illinois, Indiana, Iowa, Kansas, Michigan, Minnesota, Missouri, Nebraska, North Dakota, Ohio, South Dakota, Wisconsin

Data compares June vs. January and June 2008:

• Home resales: up 7%, down 2 percent
• Median price: $157,000, up 20%, down 9 percent
• New-home sales: up 38%, up 6 percent
• New home construction: up 86%, down 21 percent
• Mortgage delinquencies as of March: 11.5 percent

Regional outlook: "Before we can even talk about the housing sector materially improving, we're going to have to see these job losses get down quite a bit," said William Strauss, a senior economist for the Federal Reserve Bank of Chicago. Financial markets must also improve, he said, so more homebuyers can qualify for a mortgage.