From the wsj.com:

Many indicators are pointing to a bottom forming in the housing market. New-home inventories are at historic lows. Home-builder sentiment has finally turned the corner. And finally, home prices have ticked up for four months in a row on a seasonally-adjusted basis.

All that might make it tempting to call the “all clear” once and for all. But one of the earliest experts to identify the real-estate bubble, Yale University professor Robert Shiller, isn’t convinced we’ve crossed into safe territory just yet.

His reasoning? The home-price rebound, if that’s what it is, doesn’t yet have momentum – which Shiller’s research has found is the most powerful driver of home prices.

Momentum is the tendency for prices to keep moving in the same direction. It exists, but is a relatively weak force, in the stock market. In the housing market, though, it’s proven to be a reliable predictor of where prices will go in the future.

That’s in part because of what Shiller calls “feedback loops.” When someone makes a lot of money off of home-price increases, his friends hear about it and maybe the media takes note. Others who hear those stories decide to take their chances buying a home themselves. That leads to further price increases and more success stories, and the loop continues.

Feedback loops can help home prices – as they did during the housing boom – or hurt them, as they have with all the bad real-estate news over the last few years.

With several successive months of price increases, you’d think that momentum would finally be in the real-estate market’s favor. But Shiller says he stills sees reason to be skeptical.

“It could be [a bottom]. It’s a real possibility. I just don’t know,” he says.

Among the reasons to be wary, according to Shiller: a large overhang of homes that are either in foreclosure or near it. If those homes flooded the market, it could push prices down even further.

And though momentum is the No. 1 driver of home prices, the No. 2 driver, the unemployment rate, is still well over 8%.

Shiller thinks speculative bubbles might already be forming in some cities, namely San Francisco and Phoenix, which have risen 5.7% and 14%, respectively, on a seasonally-adjusted basis since bottoming.

Prospective buyers in those markets remember the huge run-ups in their markets in the last decade and so have been “primed to think speculatively,” in Shiller’s words. “At other times in history, little attention has been paid to timing the housing market,” he says. “There was a change in our mindset. Now we start thinking about the housing market as like the stock market.”

How long until the momentum effect takes hold? Shiller says he’d want to see home prices continue to increase through the fall and spring before he’s comfortable that it’s here to stay.