Home sales fell 38 percent in St. Louis last month, as the expiration of federal home-buyer tax credits sucked the life out of real estate sales. So, is this the moment to go bottom fishing in the housing market?

Rob and Melodie Wenzel certainly think so.

The Wenzels knew their first baby would make their condo feel a bit small, so they'd been watching the housing market for months. By last month, they figured that prices were near bottom, and so were mortgage rates.

They hadn't been eligible for the federal credits, which went mainly to first-time buyers. So, as sales dried up, they bought.

They paid $183,000 for a new four-bedroom, 2,500-square-foot home on an 11,000-square-foot lot in Lake Saint Louis.

Rob Wenzel thinks he got a fine deal. "We were amazed that we couldn't find a similar used house for what we paid for a new one," he said. "I still pinch myself. I thought it would be a lot harder than this."

The real estate market in St. Louis is sick, but it's not dead. It's a bad time to sell a house. But, even without money from Uncle Sam, is this still a good time to buy one?

If you're secure in your job, the decision to buy depends on what you think will happen to home prices and mortgage rates.

Mortgages are dirt cheap — if you have good credit. Freddie Mac said rates inched down again last week, averaging 4.36 percent, the lowest since the big mortgage firm started measuring in 1971.

Prices are a complicated story. Over the past few months, they've shown signs of stabilizing, or even rising, in St. Louis after three years of decline.

The median sales price in St. Louis and St. Louis County — the point where half the sales are above and half below — stood at $134,950 for the first seven months of this year. That's up from $131,625 for all of last year.

Median prices hit a high of $152,500 in 2007, according to the St. Louis Association of Realtors.

But those numbers hide big variations by neighborhood and price range. And it's not clear what the end of the tax credits will mean for pricing through the rest of the year.

The Wenzels witnessed one local phenomenon: Builders are cutting prices on new houses, and that's pulling down values for existing homes near new subdivisions.

McBride & Son Homes, one of the region's largest builders, held a sale two weeks ago, cutting prices between $5,000 and $90,000 at subdivisions around the metro area. They sold 90 new houses in two days.

Appraiser Todd Ruhl, of Encore Appraisals in Swansea, says builders are under pressure to repay loans they used to buy land before the recession. They're selling houses at no profit just to repay debt and keep their employees working, he says.

Wentzville and western St. Charles County, parts of Jefferson County and southwest St. Louis County are feeling the effects.

In more-established neighborhoods, prices are a mixed bag. Middle-class areas with moderate prices, such as Kirkwood and Crestwood, are seeing stable values, says Mike Hess, president of the St. Louis chapter of the Appraisal Institute, an appraisers organization.

That's also true in neighborhoods with 'starter" homes priced $100,000 to $200,000, including parts of south St. Louis. Prices there were supported by the federal tax credit.

North St. Louis County is an exception. The area has one of the highest foreclosure rates in the region, and that's still lowering prices, says Hess.

"You can go to any neighborhood and find foreclosures. A few aren't going to affect things," he says. But a concentration of foreclosed homes lowers prices on surrounding blocks.

"When the bank has it, they want to dump it. So, they'll take less than market value," says Hess.

Foreclosures have increased over the past few months in St. Louis. There were 2,100 homes repossessed or set for auction as of July.

Kevin Cottrell, of Kelsey Cottrell Realty Group, has made himself an expert on local real estate statistics. He sees a tough 18 months ahead for the St. Louis real estate market, with prices flat to down by 3 or 4 percent.

"This is a lot more about the economy and jobs than it is about the tax credit," he said. The tax credit pulled a lot of sales forward, attracting people who would have bought soon anyway. Buyers won't appear in big numbers until jobs are secure again, he says.

That $8,000 credit for first-time buyers expired in April, and buyers had until June 30 to close on their homes. Also expired is a smaller credit for move-up buyers who had lived in their former homes for several years.

While buyers disappeared last month, there are still a lot of homes for sale, Cottrell notes. In late April, just before the credit deadline, there were 5,000 homes on the market in St. Louis County alone. Last week there were still 4,800. That's a 9.4 months' supply of homes, he notes.

Lots of would-be sellers are sitting tight, staying off the market and hoping prices will rise in a year or two. The 4,800 properties for sale now compares to 6,200 in mid-2007, just as the housing bubble burst.

The Wenzels are both buyers and fence-sitters. They moved to St. Louis from Minnesota two years ago and bought a condo in St. Charles County. They decided not to sell it when they bought their new home. They'll rent it out instead.

In Metro East, appraiser Ruhl also thinks prices may dip a bit. "We have very weak demand and we will compound that with more foreclosures," he said.

There are some local exceptions, he noted. For instance, the market around Scott Air Force Base remains healthy.

So, is the moment right for home buyers to strike?

Mortgage rates have been declining since April, and no one knows if they'll go lower in the next few weeks. Rates tend to go down as the worry level in the global economy goes up.

Still, experts note that today's rates are the best since the Beatles, and the economy won't stay grim forever. "We're advising people that the risk of higher interest rates outweighs what you might save in the next 12 months on price," says Cottrell.

If you're thinking of selling and moving to a bigger place, consider that the bargain you'll get on your new place may make up for the beating you'll take on your current house. Of course, that won't work if you're downsizing to a smaller home.