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Home prices and mortgage rates have fallen so far that the monthly cost of owning a home is more affordable than at any point in the past 15 years and is less expensive than renting in a growing number of cities.

The Wall Street Journal’s third-quarter survey of housing-market conditions in 28 of the nation’s largest metropolitan areas found that home values declined in all but five markets compared with the second quarter, according to data from Zillow Inc. Meanwhile, rent levels have risen briskly across the country and mortgage rates, hovering around 4%, are the lowest in six decades.

As a result, monthly mortgage payments on the median priced home—including taxes and insurance—are lower than the average rent levels in 12 metro areas, according to data compiled for The Wall Street Journal by Marcus & Millichap, a real-estate brokerage that tracked 27 metro areas. It remains less expensive to rent than to buy in 15 cities. But affordability hasn’t done much to lift the sagging housing sector because many would-be buyers are unwilling to purchase a home or unable to qualify for a mortgage.

In Atlanta, which had the most favorable values for owning versus renting, the monthly payment on the average home was $539 assuming a 20% down payment during the third quarter. By contrast, the average asking rent stood at $840, according to the Marcus & Millichap data.

But real estate agents and economists say the trend hasn’t boosted demand. That is because affordability alone hasn’t been enough to overcome the obstacles in the way of a housing recovery. Some homeowners who would like to move up to larger properties are stuck because they can’t sell their homes.

Source:  Wall Street Journal ”Own vs. Rent: A Growing Reason to Buy” 11/26/2011

The square feet of new homes is expected to continue its decline in future years. The National Association of Home Builders predicts that U.S. houses will average 2,152 square feet in 2015, which will be down 10 percent compared to last year.

Smaller homes near restaurants and retail may be the most in demand as the housing market crawls out of its slump, housing experts say.

McMansions–which are at least 2,600 square feet–were popular during the years of the housing boom, but now are only desired by 18 percent of households today and is expected to drop more, according to a survey by Trulia.

“Baby boomers are trading down. They don’t need the McMansion, and they don’t want to drive as much,” Jed Kolko, Trulia’s chief economist, told Money Magazine.

Source: “A Smaller House Will Make a Big Difference,” Money Magazine (11/14/11)

Six more states — now bringing the total to 33 — will participate in a winter sales promotion as Freddie Mac’s HomeSteps looks to unload its high REO inventory.

The six states added are Alaska, Kansas, Kentucky, Missouri, Oregon, and Washington. To view a complete list of all states participating in the winter promo as well as eligibility requirements, visitwww.HomeSteps.com/smartbuy.

“We’re expanding our winter promotion to focus additional incentives to encourage strong sales activity in our ‘cold weather’ states over the next several months.” HomeSteps executive Chris Bowden said in a statement.

HomeSteps’ Winter Sales Promotion for buyers includes paying up to 3 percent of the final sales price toward a buyer’s closing costs for offers received between Nov. 15 and Jan. 31, 2012. Selling agents may also be eligible for a $1,000 selling bonus through the program.

Source: “Freddie Mac Adds Six More States to REO Winter Promo,” Housing Wire (11/22/2011)