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Struggling homeowners who are considering a short sale or modification will be eligible for tax relief in 2013. The ""fiscal cliff bill"" passed by Congress on January 1 included a provision to exclude borrowers from paying taxes on debt forgiven through a short sale, foreclosure, or loan modification. Known as the Mortgage Debt Relief Act of 2007, the act was scheduled to expire December 31, 2012, but received an extension for another year.

The Federal Reserve Bank of Boston recently conducted a study to clarify the effect of mortgage payment size on likelihood of default, and the researchers concluded ""interest rate changes dramatically affect repayment behavior."" Researchers compared homeowner payment behavior both before and after payment reductions and compared them to similar loans that did not receive simultaneous reductions. According to the findings, a payment reduction of about 2 percentage points results in a 50 percent decline in default probability.

Congress approved the appointment of Carol Galante as assistant secretary for housing and commissioner of the Federal Housing Administration (FHA). The appointment was finalized Sunday with 69-24 vote from the Senate. Galante has served as the acting assistant secretary and FHA commissioner since July 2011.

Home prices will increase by 3.1 percent in 2013 and top off 2012 with a 4.6 percent gain, according Zillow's December Home Price Expectations Survey. The survey, which was conducted by Pulsenomics LLC, was based on responses from 105 economists and industry experts. In September, survey panelists projected more modest gains and predicted prices would rise by 2.4 percent in 2013 and increase overall by 2.3 percent in 2012. Through 2017, panelists expect prices to increase by more than 3 percent annually.

As of October 2012, 2.3 million housing units still remain in shadow inventory, CoreLogic reported Wednesday. The total translates into a supply of 7 months and sits 12.3 percent lower than the 2.6 million units in October 2011, according to the data provider. In dollar terms, shadow inventory stood at $376 billion, down from $399 billion in October 2011. Seriously delinquent properties were the main contributors to shadow inventory and numbered 1.04 million units out of the 2.3 million.

Negotiators in Washington face a dismal weekend leading up to -- and perhaps including -- New Year's Eve, made worse because they're trying to solve the wrong problem. They're wrangling over how to avoid the fiscal cliff when a series of laws aimed at or contributing to the nation's deficit are set to expire, complicated by Treasury Secretary Timothy Geithner's pronouncement the nation is approaching its debt ceiling.

The Pending Home Sales Index (PHSI) increased for the third straight month in November, improving 1.7 percent to 106.4, the National Association of Realtors reported Friday. Economists had expected a slightly fast, 1.8 percent increase to 106.7. The index, the NAR said, is at its highest level since April 2010.

New home sales jumped 4.4 percent in November to 377,000, the highest level since April 2010, the Census Bureau and Department of Housing and Urban Development reported Thursday. Economists surveyed by Bloomberg expected the report to show a sales pace of 375,000.

First time claims for unemployment insurance dropped 12,000 to 350,000 for the week ended December 22, the third lowest level of the year, the Labor Department reported Thursday. Economists expected claims to increase to 365,000. The previous week’s report was revised upward to 362,000 from the originally reported 361,000.

Home prices fell in October for the first time since March, according to the monthly Case-Shiller Home Price Index. Both the 10-city index and the 20-city index decreased 0.1 percent from September to 158.77 and 146.08 respectively. The value of the 10 city index fell 0.10 and of the 20-city index dropped 0.09. The 10-city index for October was 3.4 percent higher than it was in October 2011 and the 20-city index showed a 4.3 percent year-year gain.