Are US house prices nearing rock bottom? If they are, then maybe, just maybe, other banks will not have to follow Merrill Lynch’s lead and sell distressed assets tied to the US mortgage market for a steep loss.

Exhibit A for the case comes from sales figures. Sales of both new houses and existing homes have stopped falling fast. In June, the number of existing homes sold was only 1 per cent below the number sold six months ago. Sales of new properties, down 62 per cent from the peak, are up from their levels earlier this year. Relative stability is here.