Most of the good news relates to the overall economy, but there are glimmers for housing too.

The Commerce Department recently reported that new home sales rose 5.7% in September to a 313,000-unit annual pace. This is up from 296,000 in August, and larger than the 300,000-unit number that many economists projected. Data through August 2011, released in late October by S&P/Case-Shiller Home Price Indices, the leading measure of U.S. home prices, showed increases of .2% for August versus July in major cities.

It is also noteworthy that these modest improvements are occurring during a period of very tight mortgage lending standards. When those standards return to more traditional levels we’ll see more buying activity. Unfortunately the large inventory of distressed properties continues to hold down the housing recovery. Sales remain slow largely due to our weak economy, and overall housing prices are likely to drop again in 2012.

Despite the bad part of the news more economists are coming to believe that we’re at or near the bottom of the housing market. The Administration’s recently announced changes to the HAMP program should also help, although the limited success of earlier HAMP initiatives suggests we shouldn’t expect any miracles. There’s also nothing to suggest that the current low mortgage interest rates will face significant inflationary pressures in the near term. Also encouraging is that home ownership still remains a popular goal despite a decline in housing values than began five years ago. Hanley Wood’s Housing 360 Survey recently revealed that 89% of owners and 59 percent of renters believe home ownership is important to the American families. One third of renters and about 20% of existing homeowners believe it’s a good time to buy a home and plan to buy a home in the next two years, according to the survey.

The Commerce Department recently reported that the economy grew 2.5% in the third quarter, not enough to suggest a roaring recovery, but enough to demonstrate that the economy isn’t backsliding. Spending by consumers also grew, reinforcing that conclusion. There’s good reason to believe that recovery of the housing market can begin if other economic factors turn positive.

More recent signs for the overall economy are encouraging, and could contribute to the recovery of the housing market next year. The stock market has done well in recent weeks, buoyed by progress in Europe to address its debt woes. New orders for durable goods rose 1.7% last month. Orders for nondefense-related capital goods increased 2.4%. These are indicators of business investment and typically presage new job creation.

Significant challenges still remain. The Hanley Wood survey also revealed that many homeowners and renters are in no great hurry to buy because of the soft economy. If Congress fails to make significant progress on reducing the deficit, a real possibility, the stock market and consumer confidence could plunge. Most economists believe the nation needs a sustained growth rate of about 3% before we start generating the new jobs that will be critical to the recovery of the housing market, and we’re not there yet. Still, there are enough positive signs at this point that next spring could be the turning point for the US housing market.