Housing is back on track

Foreclosures continue to drag down home prices but the inventory of new houses on the market has been plummeting to its lowest level since early 2006. Anthony Mason reports some economists believe this is the foundation for a housing recovery.

(MoneyWatch) "Real estate is back!" exclaimed a talking head on a financial network last week. The cause of the enthusiasm was the surprisingly strong Housing Starts report. In case you missed it, starts were up a better-than-expected 0.8 percent to a seasonally adjusted annual rate of 917,000 from February. Building permits, an indication of future demand, were up 4.6 percent to a seasonally adjusted annual rate of 946,000, the highest rate since June 2008.

This housing report, along with those due this week (S&P Case-Shiller Home Price Index, New Home Sales and Pending Home Sales) confirm that the nation's real estate market has bottomed and is now slowly recovering. The Housing Starts report demonstrates the progress -- starts were up 28 percent from a year ago and by about 90 percent from the lows. That said, there's still a long way to go: Starts are still 60 percent from the bubble peak of 2.3 million starts in 2006. Additionally, prices are still down about 30 percent from the peak.

That's enough of the buzz-kill part of this post. The reason that economists are encouraged by the nascent housing recovery is that after 6 long years of melting down and creating a major drag on the economy, the sector is finally poised to help the economy. No, it's not going to be like the crazy years of 2000 to 2006 when prices doubled and housing had a steroid-like impact on the nation's growth. That's OK -- remember the price that everyone paid for those juiced-up results! If housing can go back to being a reliable boost to the economy instead of the epicenter of a financial crisis, that alone would have been sufficient (H/T "Dayenu" for those who are celebrating Passover).

Markets: Stocks edged slightly lower on the week, on concerns over Cyprus.

-- DJIA: 14,512 down 0.1 percent on week, up 10.7 percent on year

-- S&P 500: 1,556, down 0.2 percent on week, up 9.1 percent on year

-- NASDAQ: 3,245, down 0.1 percent on week, up 7.5 percent on year

-- April Crude Oil: $93.71

-- April Gold: $1,606.10

-- AAA nat'l average price for gallon of regular gas: $3.69

THE WEEK AHEAD:

Mon 3/25:

8:30 Chicago Fed Activity Index

Tues 3/26:

8:30 Durable Goods Orders

9:00 S&P Case-Shiller Home Price Index

10:00 New Home Sales

10:00 Consumer Confidence

Weds 3/27:

10:00 Pending Home Sales

Thurs 3/28:

8:30 Weekly Claims

8:30 Q4 GDP final reading: Expected revision to +0.6% from +0.1%

8:30 Corporate Profits

9:45 Chicago PMI

Fri 3/29: GOOD FRIDAY U.S. STOCK MARKETS CLOSED

8:30 Personal Income and Spending

9:55 Consumer Sentiment

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    Jill Schlesinger, CFP®, is the Editor-at-Large for CBS MoneyWatch. She covers the economy, markets, investing or anything else with a dollar sign. Prior to the launch of MoneyWatch in 2009, Jill was the chief investment officer for an independent investment advisory firm. In her infancy, she was an options trader on the Commodities Exchange of New York.

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