‘Buyers in these areas are responding … ‘

Bubbles depend on the happy delusion that prices can only go up, that there will always be a new sucker to pay 10 percent more than you bought something for -- on credit, on margin -- a week or a month ago.

But nothing goes up forever. The Dutch learned that with tulips, and the lesson continues to be learned the hard way.

Home prices -- especially in California and Nevada -- were driven up by easy credit and speculative enthusiasm, beyond numbers that were sensible. Prices had to fall.

Left to its own devices, the market will correct such errors, fairly quickly and ruthlessly. Falling prices can be bad news to those who backed borrowing (or lending) with the inflated value of real estate. But they're also good news when they make houses more affordable to legitimately qualified buyers.

And when prices fall far enough that buying shows an upsurge, that can be the best of news, because it's an indicator that the correction is working -- the end of the tunnel may be in sight.

Median home prices continued to fall in more than three-quarters of U.S. cities in the second quarter, the National Association of Realtors reported Thursday. That's an indication the correction is still under way -- perhaps delayed by infusions of fast-inflating greenbacks onto the balance sheets of banks that the Federal Reserve would rather not see fail and liquidate.

But where the course of foreclosure and asset write-down has proceeded at a faster pace -- in Nevada and California -- home sales actually increased in the second quarter when compared with last year, the NAR reports.

This spring, median home prices were down by nearly 24 percent in the Las Vegas area compared with a year ago. Prices in Los Angeles, Riverside and Sacramento plunged by 30 percent or more.

That made a difference. Where home sales continued to fall for the nation as a whole -- down by 16.3 percent in the second quarter compared with the same period a year ago -- home sales actually grew in California, by 3.7 percent.

In Nevada, home sales shot up 18 percent this spring -- the best performance in the nation.

The biggest home sales gains in recent months "have been in some of the markets with the steepest and fastest price drops," thanks to foreclosed properties coming back onto the market at discounted prices, said Lawrence Yun, the trade group's chief economist.

"Buyers in these areas are responding to deeply discounted home prices."

Time to sing "Happy Days Are Here Again"?

It may be a bit early for that.

But Las Vegas has long been a market that thrives on growth. For the past year or more, that growth has been anemic at best. But now comes word that Nevada home sales shot up 18 percent this spring.

And that's a piece of overdue good news.