House prices are showing signs of greater stability after the falls in the second half of last year.

Today Hometrack released figures showing prices in March were just 0.1% down while Nationwide released a figure of plus 0.5%.

But the big question on everyone’s mind is where to from here for the market as homebuyers and sellers adjust to the squeeze within the economy. And among construction folk what does this all mean for house building.

Well we can expect the index figures to bounce a bit month to month. But taken in the round and in the light of other recent data, these two figures add further weight to the view that there is a bit of a stand-off between buyers and sellers.

As Robert Gardner, Nationwide’s chief economist put it: “While demand is likely to remain fairly soft, a rapid increase in the supply of properties also appears unlikely. Low interest rates and a stabilisation in labour market conditions have prevented a rise in forced selling, and the subdued market outlook is deterring many sellers from entering the market.

“With the economic recovery expected to remain sluggish, the most likely outcome is that the property market will follow suit, with low transaction levels and prices moving sideways or modestly lower through 2011.”

Whatever happens to prices, this low level of transactions is in itself a pain for construction firms looking to make a living out of the housing market. Low transactions in the wider market tend to be reflected pretty directly into fewer new homes sold.

And as this blog has mentioned before there is a strong argument to suggest that the industry could find itself trapped in low levels of new build for some time yet.

But there are some useful points made by Hometrack’s Richard Donnell, not least the reminder that rapid swings in the housing market are indicative of a low-transaction environment.

Hometrack takes that view that while there is on balance more to suppress prices than boost them, the market will be highly polarised with pockets of strong activity alongside weaker areas.

This, fortunately, provides opportunities for house builders as they have some level of control over which segments of the market and which region they target to meet the demand that exists.

Overall, the consensus, such as one exists, suggests that house prices at a national level will be under pressure for most of this year and probably end up slightly down, as the slow grind of falling real earnings takes its toll. This, conditionally, is a view to which I would tend to subscribe.

But this view only really holds providing interest rates and unemployment levels don’t take a sharp upward curve.