The reason: Home prices nationwide are off about 36% from their peak. Median income has risen by about 10%. And mortgage rates are below 4%.

And with mortgage rates low, many house hunters have already started to pounce on bargains, said David Stiff, chief economist at Fiserv, a financial analytics company that prepared the forecast. “Some markets may have overshot to the downside, and people are jumping in to try to catch the bottom,” Stiff said.

Nationwide, home prices will start rebounding late this year and gain an average of 4% a year over the next five years, Fiserv projects.

In a separate report released Wednesday by the National Association of Realtors, the national median home price declined by just 0.4% in the three months ended March 31 compared with the same period in 2011.

About half of the 146 metro-area markets surveyed by NAR showed a price increase, as buyers make inroads into the supply of homes for sale all across the country. National inventory has dropped by 22% compared to a year earlier.

“Given the steadily dwindling supply of inventory and notably higher listing prices that are being negotiated today, prices are expected to show further improvements in the near future,” said Lawrence Yun, NAR’s chief economist.

Home prices will also be driven higher as banks opt for short sales instead of repossessions. Repossessed homes sell for between 25% and 50% less than comparable homes sold by conventional sellers, according to Daren Blomquist, a spokesman for RealtyTrac, which markets foreclosed properties.

Bank repossessions often go through lengthy foreclosure processes and long periods of vacancy, during which they may deteriorate and lose value.

Fiserv’s Stiff forecasts that Madera, Calif., will produce the largest home price gain over the next two years. This market bubbled during the housing boom, with the median home price jumping above $300,000, according to the National Association of Home Builders.

Prices have since tumbled 53% off their peak, to about $125,000. Fiserv is projecting a price jump of 21.5% by the end of 2013 with 16.5% of that increase coming next year.

Other double-digit gainers will include Medford, Ore., with a 20.1% rise, Yuma, Ariz., with 16.7%, and Corvallis, Ore., with 11.4%. 

April 2012	Sales YTD	Avg List Price	Avg Sale Price	2011 Sales	Value of the Month
Las Campanas	13	1,059,377	968,957	18	FEATURED PROPERTY 8 Thundercloud Rd  $969,000
Northwest County	34	638,324	603,221	40	FEATURED PROPERTY 3072 Monte Sereno Dr  $1,075,000
Northeast City	47	713,686	648,698	43	FEATURED PROPERTY 830 Camino Del Este  $700,000
Tesuque	15	659,393	614,300	4	FEATURED PROPERTY 182 Tesuque Village Rd  $785,000
Santa Fe City	284	411,369	382,912	230	FEATURED PROPERTY 526 Camino Militar  $1,350,000
Santa Fe County (includes city)	475	435,569	407,106	399	FEATURED PROPERTY 3173 Vista Sandia  $739,000

Go In-Depth Market Report for Las Campanas

The homebuilder stocks were surging (actually they’d been surging since late last fall, and the early months of the year saw a continuation).

The index is now at the highest level since April 2010 when it reached 111.3.

The survey, conducted for FICO by the Professional Risk Managers’ International Association (PRMIA), found fewer lenders expecting a rise in delinquencies on home loans, as well as car loans and small business loans, than at any time since FICO launched its survey in early 2010. The survey also examined sentiments on student loans and credit cards.

“As unemployment falls, even modestly, and four years of de-leveraging begin to pay dividends, bankers are allowing themselves to feel some optimism,” said Dr. Andrew Jennings, chief analytics officer at FICO and head of FICO Labs. FICO is a leader in credit scoring systems.

The survey found the number of respondents expecting mortgage delinquencies to rise during the next six months was 12 percentage points lower than last quarter – dropping from 47 to 35 percent. Similarly, only 33.1 percent expect increases in home equity line delinquencies, compared to 44.3 percent last quarter.

The overall trend in both categories has been trending more optimistic for the past eight quarters, FICO reported. Viewed another way, the number of respondents who believe mortgage and home equity line delinquencies will decrease hit an all time high, 26 percent and 23.1 percent respectively.

March 2012	Sales YTD	Avg List Price	Avg Sale Price	2011 Sales	Value of the Month
Las Campanas	9	979,322	886,167	11	FEATURED PROPERTY 83 Estates Dr  $929,000
Northwest County	20	682,530	646,925	26	No Listings Found Sorry, no listings matched your search.
Northeast City	33	779,798	698,615	30	FEATURED PROPERTY 830 Camino Del Este  $700,000
Tesuque	12	717,992	659,292	4	FEATURED PROPERTY 11 Pulitzer Trail #B  $650,000
Santa Fe City	200	435,219	404,323	170	FEATURED PROPERTY 208 Plaza Montana  $735,000
Santa Fe County (includes city)	330	445,941	415,214	281	FEATURED PROPERTY 8 Thundercloud Rd  $969,000

Go In-Depth Market Report for Las Campanas

Home prices have fallen a whopping 34.4% from the peak set in July 2006.

Reports on housing starts, building permits and February’s new and existing home sales will all be released this week.

Read More: http://money.cnn.com/2012/03/18/markets/stocks-lookahead