There was an important piece of economic news last week that has HUGE significance for real estate and housing, but it got minimal coverage on TV and in print.

The Conference Board's Index of Leading Economic Indicators, widely acknowledged as the most accurate predictor of future activity and output in the U.S. economy, rose by almost a point in June.

That was the third straight month of positive growth. But more importantly, it was the first time since 2004 that the index has increased for three consecutive months.

That's crucial for real estate because housing sales, production and prices are closely tied to movements in the overall economy: jobs, manufacturing, exports, household incomes and the like.

There's no way we're going to see a sizable housing recovery until the economy pulls itself out of recession and starts to grow again.

The index of leading indicators is clearly telling us that that process is well underway -- and that's a very encouraging message.

Federal Reserve Chairman Ben Bernanke, in testimony before Congress last week, pretty much said the same: A modest recovery is not far off, he said, though it will take a long time to get unemployment levels back down to pre-recession levels.

Meanwhile, residential real estate continues to put up impressive numbers on the tote board:

New single family housing starts in June rose by 14.4 percent -- the fourth straight month of increasing activity by home builders, who'd previously shut down construction because they hadn't sold off their inventories. And they were afraid consumers wouldn't pay the prices they need to charge.

Those worries are over. Total starts in New England were up by 29 percent and in the Midwest by 33 percent. Builders report seeing much more traffic at their subdivision showrooms, far lower fallout on contracts, and rising sales.

Sales of existing homes were up in many areas for the month as well - rising by 3.6 percent nationwide in June, according to the National Association of Realtors. Lawrence Yun, chief economist for the association, commented that "we expect (this) gradual uptrend in sales to continue" thanks to the $8,000 home buyer credit, favorable mortgage rates and low prices.

New mortgage applications to buy houses continued to increase last week, according to the Mortgage Bankers Association, even though rates edged slightly higher. Thirty-year fixed rates averaged 5.3 percent and 15-year rates averaged 4.8 percent for the week, both up by two-tenths of a percentage point.

All in all, the numbers are looking better and better.

Published: July 28, 2009

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Kenneth R. Harney writes an award-winning, nationally-syndicated column on housing and real estate from Washington, D.C. He is also managing director of the National Real Estate Development Center, a professional education company. He is a past member of the Federal Reserve Board's Consumer Advisory Council, a committee that by federal statute reviews all Fed actions on home mortgage, consmer credit and banking industry regulation. He served as a member of the U.S. Department of Housing and Urban Development's Working Group on Computerized Loan Origination (CLO) systems, and is a member of the Editorial Board of the Fannie Mae Foundation's journal, Housing Policy Debate. He is the author of two books on mortgage finance and real estate.