Borrowing costs are at historic lows. The average U.S. rate for a 30-year fixed mortgage was 4.69 percent last year, the lowest in annual data going back to 1972, according to mortgage financier Freddie Mac, based in McLean, Virginia. The rate in March was 4.84 percent, the company said.

By 2012's fourth quarter, the average fixed rate may rise to 6 percent, according to the Mortgage Bankers Association.

"If you can jump through the hoops to get a mortgage, and there will be hoops, then this is an amazing time to purchase real estate," said Robert Stein, a senior economist at First Trust Portfolios LP in Wheaton, Illinois, and the former head of the Treasury Department's Office of Economic Policy. "There are going to be a lot of people kicking themselves a few years from now because they didn't take advantage of the low prices and the low mortgage rates."

Cheap financing hasn't done enough to boost home sales in part because lenders are being more selective with applicants, according to Federal Reserve Chairman Ben Bernanke. Fed policy makers have described the housing market as "depressed" in statements following their last eight meetings.

Eoin Treacy's view The collapse of debt fuelled business models, most obvious in the housing market, remains a drag on the US economy. Confidence is still at a low ebb and foreclosures continue to make headlines. Consumers remain shy of purchasing homes despite higher affordability because they are unsure about their economic prospects. However there have been a number of developments over the last few months that are worth reviewing.

A year ago there was a great deal of commentary focusing on the "jobless recovery" despite the fact that employment is a lagging indicator. Employment is now beginning to recover. There are still a considerable number of hurdles for the US economy to overcome but investors now appear prepared to believe the recovery is on a firmer footing than it was last year.

Home foreclosures have been a scandal. It is looking increasingly likely that a number of household name banks will have to pay compensation to people unlawfully evicted from their homes. This article by David McLaughlin for Bloomberg carries some additional information. At least in part because banks are now more cautious about proceeding with foreclosures, the number of new filings has pulled back sharply this year suggesting a peak of at least medium-term significance. Foreclosures have been a major source of housing oversupply. 225,000 new filings is still a big number but this is a problem that is not getting worse.

The S&P/Case-Shiller Composite 10 Index peaked near 226 in 2006 and found support near 150 in 2009; a fall of 33%. Prices have stabilised over the last two years and while there is little evidence as of yet that this is a definitive bottom, a sustained move below 150 would be required to question that hypothesis.

The NAHB Market Index hit an accelerated low in late 2008 and appears to have entered a phase of base formation development. At this stage, the more relevant question is when the Index will be able to sustain a move above 25 rather than if it will.

Housing Affordability remains at an historic peak. Prices may yet get more affordable but the window for such an outcome is probably closing. Government bond yields are already bottoming out. Interest rates have bottomed and will probably begin to rise at some point over the next year. Freddie Mac 30yr mortgages are still below 5% but are unlikely to fall back below their November low near 4.2%. House prices have at least stabilised and unemployment may have peaked.

The US Housing market appears to be in the process of bottoming. However, bottoming and recovery are not the same thing. There is a still a surfeit of supply overhanging the market and a new bullish environment is unlikely to become evident until demand returns to dominance.