Average housing prices in the US are expected to hit bottom by spring 2011 and begin gradually rising next year, Frank Nothaft, chief economist and vice president of housing lender Freddie Mac reported at the annual International Builders Show in Orlando.

Nothaft commented that historically low mortgage rates and other positive economic indicators, like a small drop in the rate of unemployment, increases in purchases of durable goods and a slight slowing of serious delinquencies feeding the glut of foreclosed housing stock, were the main reasons for renewed optimism.

He reportedly said: “This is the time to come in the market if youve got the financial resources and wherewithal.” However, he did warn that the recovery around the country will not be even and California, Florida and Nevada may suffer longer than most other areas.

Freddie Mac and the National Association of Home Builders (NAHB) are predicting a 20% increase in new housing starts this year, albeit from a very low base.

The optimism for increased construction is based on the fact that the national inventory of new homes is at a 40-year low and up to 2m people have delayed moving because of the recession according to the NAHB.

However, banks in the US repossessed more than 1m homes in 2010, up 14% from 2009 and, according to RealtyTrac, around 3m homes have been repossessed since the housing boom ended in 2006. Also, almost 2.9m homeowners in the US got default notices last year and the number of repossessions in 2011 is expected to increase a further 20% to 1.2m homes.