Although prices are improving and foreclosures are declining, there’s still room for economic uncertainty to “dampen” housing activity, according to DataQuick’s Property Intelligence Report (PIR) for February.

The monthly report assesses the nation’s largest 42 counties and measures growth on a monthly, quarterly, and yearly basis.

For February, the data and analytics company found home prices grew in 34 of the 42 counties on a monthly and quarterly basis. Over a one-year period, prices moved in a positive direction in 35 of the counties.

Although the figure for sales was not as impressive, performance improved monthly and quarterly compared to January.

In February, 22 of the counties saw an increase over the last month, up from 12 counties that saw month-over-month improvements in January.

Over the last quarter, sales were up 17 of the 42 counties, a sharp increase from 6 counties that saw sales go up quarter-over-quarter in January. Year-over-year, sales were on the rise in 30 of the counties in February.

The trend for foreclosures showed little variation over the different time periods, with foreclosures trending downward on a monthly, quarterly, and yearly basis in 24, 26, and 25 of the 42 reported counties, respectively.

DataQuick also noted four hard-hit states-Arizona, California, Florida, and Nevada-saw double-digit price growth over the last year, while other markets are averaging growth at 2.5 percent.

Gordon Crawford, Ph.D., VP of analytics for DataQuick, says the monthly and quarterly growth in prices reveals markets are continuing to “rise toward a certain stabilization despite looming economic factors.”

“Recent home price growth rates, however, might be overcompensating for an overcorrecting decline in home prices during the downturn. As a result, we expect the growth rates in these markets to slow to a level that is more in line with the rest of the country’s home price growth,” he added.

Despite the overall positive news on the housing front, Crawford maintains a cautious attitude when it comes to the market.

“Uncertainty factors lead to a difficult time valuing real estate, dampening the activity of both buyers and sellers,” said Crawford. “Employment rose by 236,000 jobs in February, and although that is a favorable number, we have seen this in previous years where employment growth is positive, only to decline in later months of the year.”

Crawford noted additional factors that can lead to uncertainty such as unsustainable deficit levels, as well as domestic fiscal issues and financial issues in the eurozone.

by Esther Cho