Spring buying season is in full swing with new home sales nearly matching a five-year high last month as the housing market continues making progress. 

Sales increased 2.3 percent in April to a seasonally adjusted annual rate of 454,000, nearly equaling the 458,000 pace in July 2008, the Commerce Department said Thursday. 

The gain builds on a strong upward revision to sales numbers from March.

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Sales of existing homes hit their highest level in more than three years in April.

The National Association of Realtors said on Wednesday that sales, which are completed transactions, increased 0.6 percent to a seasonally adjusted annual rate of 4.97 million, up from 4.94 million in March.

Sales hit their best clip since November 2009, when the market jumped to a 5.44 million pace because of a federal homebuyer tax credit.  

Resale activity is 9.7 percent above the 4.53 million level a year ago, but the pace would be closer to meeting demand if it weren't for low inventory and tight credit conditions, according to one economist. 

“The robust housing market recovery is occurring in spite of tight access to credit and limited inventory," said Lawrence Yun, NAR chief economist.

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Home builders started work on fewer homes in April, driven by a sharp drop in apartment construction. 

While builders broke ground on homes at a slower seasonally adjusted annual rate of 853,000, building permits, which are a gauge of future construction, hit a five-year high, the Commerce Department reported on Thursday. 

April's construction figure is 16.5 percent below the 1.02 million pace in March, which was the highest level since 2008. 

However, applications for building permits rose 14.3 percent, with a solid gain in multifamily issuance, to a rate of 1.02 million, the fastest pace since June 2008. That increase reflected a 3 percent gain to 617,000 units on the single-family side and a 37.5 percent gain to 400,000 units in apartment building. 

“The big decline in April housing production was mostly on the multifamily side, which recorded a similarly dramatic increase in the previous month,” said David Crowe, chief economist for the National Association of Home Builders (NAHB).

House hunters are the beneficiaries of a historically high affordability conditions that could help further propel the housing sector's improvement. 

In all, 73.7 percent of new and existing homes sold between the January through March quarter were affordable to families earning the U.S. median income of $64,400, according to a National Association of Home Builders (NAHB)/Wells Fargo Housing Opportunity Index (HOI), released on Tuesday.

The figure is down slightly from the 74.9 percent in the final quarter of last year. The index has not dropped below 70 since the end of 2008. 

"Thanks to very favorable mortgage rates and prices, housing affordability has remained quite high over the past four years," said NAHB Chairman Rick Judson, a home builder from Charlotte, N.C. 

News that Fannie Mae and Freddie Mac are making money could cause Congress to lose interest in a housing overhaul.

The number of improving housing markets dropped in May as the sector experiences several hurdles during its recovery. 

An index by the National Association of Home Builders (NAHB) and First American found that improving markets fell slightly to 258 in May from 273, the groups said Monday. 

"The fact that over 70 percent of all U.S. metros are holding onto their spots on the improving list is definitely good news, and representative of the generally brightening outlook for housing markets nationwide," said NAHB Chairman Rick Judson, a home builder from Charlotte, N.C. 

The House will turn this week to a bill that Republicans say would prevent the United States from defaulting on its debts.

The Full Faith and Credit Act is a preemptive attempt by Republicans to defuse the warnings from the White House and Democrats about holding the debt ceiling “hostage” in fiscal negotiations. The bill would give the Treasury Department the ability to borrow above the limit to cover bond and Social Security payments.

While the Treasury insists it cannot prioritize payments and avoid a default if its borrowing capacity is reached, Republicans disagree, and say their bill should assure markets that the country will always pay its debts.

Lawmakers will likely have to increase the debt ceiling sometime in the late summer or early fall.

Republicans say Obama should accompany his pick to head the Federal Housing Finance Agency with a comprehensive housing plan.

Watt's nomination to lead the Federal Housing Finance Administration faces a bumpy road in the Senate.

A new report out Wednesday could give Democrats more muscle in their push for mortgage giants Fannie Mae and Freddie Mac to reduce principal mortgage balances. 

The Congressional Budget Office's (CBO) analysis shows that providing loan reductions for borrowers underwater on their mortgages through the Home Affordable Modification Program (HAMP) could save taxpayers billions of dollars, avoid thousands of unnecessary defaults and provide a boost to the economy.  

“Rather than implement these programs years ago when their benefits were obvious, ideologues ignored this evidence and harmed our nation as a result," said House Overnight and Government Reform Committee ranking member Elijah Cummings (D-Md.). 

"I hope this report provides a new opportunity to anchor our nation’s housing policy in facts rather than partisan politics.”

The housing industry is largely on board with President Obama's choice for the next top overseer of mortgage giants Fannie Mae and Freddie Mac.

The National Association of Home Builders (NAHB), the National Association of Realtors (NAR) each expressed support Wednesday for the expected announcement of Rep. Mel Watt (D-N.C.), one of the highest ranking members on the House Financial Services Committee, to lead the Federal Housing Finance Administration (FHFA). 

"After four years in conservatorship, the future of Fannie Mae and Freddie Mac stand at a crossroad," NAHB Chairman Rick Judson, a homebuilder and developer from Charlotte, N.C., said in a statement.

"Rep. Watt brings years of experience to this position at a pivotal moment as our nation's housing market recovers. NAHB looks forward to working closely with Rep. Watt to help address the many complex challenges facing the U.S. housing finance system upon his confirmation by the U.S. Senate."

Sen. Elizabeth Warren (D-Mass.) is delighted with President Obama's pick to replace Edward DeMarco at the head of the Federal Housing Finance Agency (FHFA) and added that DeMarco should be scrapped immediately.

In a statement, Warren hailed the president's planned pick of Rep. Mel Watt (D-N.C.) as an "excellent choice," and called for his swift confirmation by the Senate.

But she also made clear that the White House should not wait for the Senate to sign off before removing DeMarco from his post. She accused the FHFA under his watch of "cold indifference" to struggling homeowners, adding that it is "time for a change."

U.S. home prices continue to surge, as nationwide home values have climbed the most in nearly seven years.

Home prices have climbed 9.3 percent in the 12 months leading up to February, according to the latest data from the S&P/Case-Shiller home price indices, released Tuesday. Half of the 20 cities tracked by the index posted double-digit gains in that year, and every city is up at least 5 percent during that time, as the housing market continues to make a comeback.

“Home prices continue to show solid increases across all 20 cities. The 10- and 20-City Composites recorded their highest annual growth rates since May 2006,” said David M. Blitzer, chairman of the index committee at S&P Dow Jones Indices. “Despite some recent mixed economic reports for March, housing continues to be one of the brighter spots in the economy."

As of February, home prices have returned to the levels seen in the fall of 2003. However, when compared to the peak seen in the summer of 2006, home values still linger roughly 30 percent below that high.

Pending home sales hit a three-year high in March, but contract signings are leveling off because of low inventory. 

Contract signings increased 1.5 percent to 105.7 in March, the highest level since April 2010, when a federal tax credit helped to boost sales, the National Association of Realtors (NAR) reported on Monday. 

While the momentum continues for a housing recovery, "contract activity has been in a narrow range in recent months, not from a pause in demand but because of limited supply," said Lawrence Yun, the NAR chief economist. 

"Little movement is expected in near-term sales closings, but they should edge up modestly as the year progresses," he said. "Job additions and rising household wealth will continue to support housing demand."

A group of House Democrats want an independent consultant to oversee billions in payments to borrowers who lost their homes because of shoddy foreclosure practices after some of the checks bounced last week. 

Maryland Rep. Elijah Cummings, ranking member of the House Oversight and Government Reform Committee, along with seven other House Democrats, introduced a measure on Thursday that would ensure the funds mortgage servicers have agreed to pay for shoddy foreclosures get to those harmed by the procedures while also setting up a system for Congress to track the process.

“Mortgage servicers have now admitted that they broke the law by illegally foreclosing on American families and committing numerous other abuses, but regulators refuse to provide even the most basic information about the extent of the abuses that were uncovered,” Cummings said.  

"Since federal regulators now plan to rely on these same banks to determine payouts and deliver settlement funds to borrowers, we need an independent monitor to bring transparency and accountability to this process.”

The housing sector is showing all the signs of a rooted recovery as new data reflects a pick up in new home sales along with an increase in prices. 

Sales of new homes rose 1.5 percent in March to a seasonally adjusted annual rate of 417,000, the Commerce Department said Tuesday.

That is below January's pace of 445,000, which was the fastest since July 2008, and is still below the 700,000 that economists say reflects a healthy market. 

But sales are 18.5 percent from a year ago and the housing industry is expecting continued improvement this year. 

"The latest sales report is right in line with our forecast for continued, modest increases in home prices and sales through 2013," said David Crowe, the chief economist for the National Association of Home Builders (NAHB). 

A short housing supply slowed sales of previously owned homes last month. 

Total sales of existing homes, which include completed transactions of single-family homes; townhomes; and condominiums, declined 0.6 percent to a seasonally adjusted annual rate of 4.92 million in March from downwardly revised 4.95 million in February, the National Association of Realtors (NAR) said on Monday. 

"Buyer traffic is 25 percent above a year ago, when we were already seeing notable gains in shopping activity," said Lawrence Yun, NAR chief economist.

"In the same timeframe, housing inventories have trended much lower, which is continuing to pressure home prices." 

Fresh data on U.S. economic growth comes this week as both the House and Senate attend to a full slate of economic events.

On Friday, the Commerce Department will provide its first estimate of economic growth in the first quarter of 2013. The advance estimate will come after the government reported the nation’s gross domestic product grew just 0.4 percent in the last three months of 2012, as businesses braced for the “fiscal cliff.”

Meanwhile, both the House and Senate are in session with a number of high-profile hearings on tap.

The embattled acting chief of the Federal Housing Finance Agency (FHFA) got a vote of confidence Thursday from lawmakers, who urged quicker action to transition mortgage lending giants Fannie Mae and Freddie Mac out of federal conservatorship.

For months, Edward DeMarco has taken fire from Democrats and left-leaning groups over his decision not to allow Fannie and Freddie to reduce loan principals for underwater borrowers, those who owe more than their homes are worth.

But on Thursday, Republican and Democratic members of the Senate Banking Committee had mostly kind words for DeMarco during a hearing to take stock of the agency’s efforts to help bring the mortgage market back from a national foreclosure crisis.

“You have been an extraordinary person in this job, despite what some people say,” Sen Richard Shelby (R-Ala.) said.

Home builders broke ground on more than 1 million homes last month for the first time in nearly five years, driven by a sharp increase in multifamily building. 

Housing starts increased by 7 percent in March, to a seasonally adjusted annual rate of 1.04 million, clearing that mark for the first time since June 2008, the Commerce Department said Tuesday.

Apartment construction, which can be volatile from month to month, surged by 31 percent to an annual rate of 417,000, the fastest pace since January 2006.

Meanwhile, single-family home building, dropped by 4.8 percent to an annual rate of 619,000, mostly because February's figures were revised up by 5.2 percent, which was the fastest pace since May 2008.

“Today’s report is a reflection of the solid demand that many areas are seeing for rental apartments as young people take that first step into the housing market, which is a very positive development,” said Rick Judson, chairman of the National Association of Home Builders (NAHB) and a home builder from Charlotte, N.C. 

Momentum appears to be growing for the Obama administration to name a permanent housing regulator to oversee the future of mortgage giants Fannie Mae and Freddie Mac. 

Mark Zandi, a well-known economist who is a regular on Capitol Hill, may have enough popularity to gain Senate approval and win the job to head up the Federal Housing Finance Administration (FHFA) and replace embattled Edward DeMarco, the agency's acting director. 

If the White House ultimately chooses Zandi — President Obama's last nominee in 2011 couldn't get through the Senate — it would move the administration closer to its housing policy goals, including reducing mortgage principal for some borrowers.

Still, in a broader stroke, the next FHFA director would be expected to guide Fannie and Freddie through an overhaul that would decrease their role in mortgage finance. 

Home builder confidence dropped in April on rising costs for building materials and short supply for lots and skilled labor. 

Sentiment in the market for newly built single-family homes fell two points to 42 in the latest gauge, although builders expressed their highest level of optimism about the future in more than six years, the National Association of Home Builders reported on Monday. 

"Supply chains for building materials, developed lots and skilled workers will take some time to re-establish themselves following the recession, and in the meantime builders are feeling squeezed by higher costs and limited availability issues," said David Crowe, NAHB's chief economist.

"That said, builders' outlook for the next six months has improved due to the low inventory of for-sale homes, rock bottom mortgage rates and rising consumer confidence."

A bipartisan immigration plan with major implications for the economy is set to arrive on Capitol Hill this week.

Business groups are eager to see how the Senate’s Gang of Eight deals with visas for both high-skilled and low-skilled workers in the bipartisan plan. They say an “ample” amount of visas are needed to plug holes in America’s workforce. 

Lawmakers are also be entering their second week of poring over the White House’s budget plan.

Mark Zandi and a North Carolina representative are reportedly under consideration to lead the Fannie Mae and Freddie Mac regulator.

Borrowers with government-backed loans will get two more years to refinance their underwater mortgages with the extension of a federal program. 

The Federal Housing Finance Agency (FHFA), the housing regulator that oversees Fannie Mae and Freddie Mac, is extending its main refinancing program through the end of 2015, two years longer than initially planned, which could help millions more refinance their problematic loans while reducing the taxpayer investment in the government-controlled mortgage giants.

The Home Affordable Refinance Program (HARP) provides options for borrowers with little or no equity in their homes to get into a loan with a lower interest rate. 

"More than 2 million homeowners have refinanced through HARP, proving it a useful tool for reducing risk,” said FHFA Acting Director Edward DeMarco. 

House Republicans criticized the Obama administration's budget for including nearly $1 billion in bailout funds for a government mortgage insurer to shore up its balance sheet this year. 

President Obama's budget proposal anticipates that the Federal Housing Administration (FHA) will need a $943-million infusion of cash to bolster its reserve fund amid a slew of changes designed to put the agency back on a path to solvency. 

House Financial Services Committee Chairman Jeb Hensarling (R-Texas) said that if the FHA were a private financial institution, "likely somebody would be fired, somebody would be fined, or the institution would find itself in receivership."  

"Instead, the FHA is merrily on its way to becoming the recipient of the next great taxpayer bailout. It’s outrageous."

The U.S. government will actually turn a profit on its bailout of housing giants Fannie Mae and Freddie Mac, according to President Obama's 2014 budget proposal.

Assuming that Congress and the White House do not act to eliminate the government-sponsored enterprises (GSEs) over the next decade, Obama's budget released Wednesday projects the government will ultimately turn a $51 billion profit on its 2008 rescue of the then-ailing housing giants.

The federal government has pumped $187.5 billion into Fannie and Freddie since their rescue in the wake of the subprime mortgage crisis. The two entities were weighed down by significant losses on their guaranteed mortgages when the housing bubble burst.

But with the housing market turning around and the GSEs looking to shore up their books, Fannie and Freddie are beginning to turn a profit again, which is now going straight to the Treasury Department.

President Obama will offer a budget this week that is expected to include $600 billion in new tax hikes and calls for entitlement cuts.

The long-delayed White House budget will arrive on Capitol Hill months late — and after the House and Senate approved their own budget blueprints.

Treasury Secretary Jack Lew will testify at hearings on Thursday with the House Ways and Means and the Senate Finance committees. He may also get some questions about his two-day swing through Europe, where he is set to discuss the EU financial crisis.

Jeff Zients, the acting director of the Office of Management and Budget (OMB), will testify Thursday before the Senate Budget panel on the president’s proposal. The House Budget Committee will also explore the president’s proposal with Zients on Thursday.

The Consumer Financial Protection Bureau (CFPB) announced Thursday it had fined four mortgage insurers $15.4 million for doling out illegal kickbacks to mortgage lenders in exchange for business.

The enforcement action from the consumer watchdog tackles a practice it says was "common practice" in the years before the financial crisis, and the institutions fined were "key players" in the kickback scheme.

“Illegal kickbacks distort markets and can inflate the financial burden of homeownership for consumers,” said CFPB Director Richard Cordray. “We believe these mortgage insurance companies funneled millions of dollars to mortgage lenders for well over a decade. The orders announced today put an end to these types of arrangements and require these insurers to pay more than $15 million in penalties for violating the law.”

The nation's largest business lobby argues reforms in financial regulations are essential for the health of business.

The housing market's recovery remained steady in April although some markets are struggling to pick up pace because of low inventories. 

After seven straight months of gains, there were 273 improving housing markets, which was mostly unchanged from last month, according to an index released on Thursday by the National Association of Home Builders (NAHB). 



"After a strong run-up through late 2012 and early 2013, the number of improving markets is holding steady at a high level," said David Crowe, NAHB's chief economist. 

A draft report obtained by The Hill faults the Office of the Comptroller of the Currency and the Federal Reserve.

Sen. Bob Corker (R-Tenn.) does not want to see Congress lose its focus on housing reform now that Fannie Mae and Freddie Mac are turning eye-popping profits.

The Senate Banking Committee member responded Tuesday to reports that the two government-sponsored enterprises (GSEs) posted record profits in 2012 by urging lawmakers to keep their foot on the gas in their effort to overhaul the nation's housing system.

"I’m glad Fannie Mae is showing an increase in income, but we have to remember that this is largely because we have crowded out private capital and made Fannie or Freddie the only viable execution option for new loans," he said in a statement. "So while I am hopeful that taxpayers can quickly be repaid for their investment in the GSEs, we must focus now on building a more sustainable 21st century system of housing finance that restores the private mortgage market after years of government dominance."

The housing giant turned a $17.2 billion profit in 2012, its first year in the black since the housing bubble burst.

Pending home sales dipped slightly in February because of low inventory but they were still at the second-highest level in nearly three years.

Contract signings, a forward-looking indicator, dropped to 104.8 in February, down from January's 105.2 reading, which was the highest since April 2010 when a home buyer's tax credit helped sluggish sales, the National Association of Realtors (NAR) said Wednesday.

"The volume of home sales appears to be leveling off with the constrained inventory conditions, and the leveling of the index means little change is likely in the pace of sales over the next couple months," said Lawrence Yun, NAR chief economist.

The index is 8.4 percent higher than a year ago. There is usually about a two-month lag between contract signing and closing. 

The top Democrat on the House Financial Services Committee is praising an oft-criticized housing regulator for taking on costly "forced" insurance plans imposed on homeowners.

Rep. Maxine Waters (D-Calif.) hailed the Federal Housing Finance Agency (FHFA) Tuesday for considering restrictions on such "force-placed" policies, arguing the rules would help protect consumers from costly collusion between banks and insurers.

"The proposed change in the FHFA’s policy will benefit consumers who pay dearly for insurance that is artificially inflated because of cozy financial relationships between banks and insurers," she said in a statement. "The current practice is deeply wrong and I appreciate the fact that the FHFA is finally yielding to legitimate concerns about abuses in this market."

Home prices in the last year showed their biggest gains since 2006, as cities across the country reported climbing values during the housing market rebound.

Meanwhile, new government data found that new home sales dipped in February, but still remain well above levels seen one year ago.

Home prices in 20 cities nationwide were up 8.1 percent, according to the latest S&P/Case-Shiller Home Price Index released Tuesday. Eight of those cities posted double-digit gains in the last 12 months in the strongest numbers seen since the housing market turned south.

“The two headline composites posted their highest year-over-year increases since summer 2006,” said David M. Blitzer, chairman of the Index Committee at S&P Dow Jones Indices. “This marks the highest increase since the housing bubble burst."

The top Democrat on the House Financial Services Committee is pushing legislation that would provide funds to overhaul foreclosed and abandoned properties.

Rep. Maxine Waters (D-Calif.) introduced on Friday the Project Rebuild Act, which would renew efforts to implement a $15 billion piece of President Obama's American Jobs Act. The president unveiled his vision for a job creation bill back in 2011, but the measure largely fizzled in the divided Congress.

Now, Waters is hoping her legislation can pump more life into the recovering housing market while providing relief to neighborhoods blighted by foreclosures and abandoned properties. The bill would provide formula and competitive grants for the rehabilitation and redevelopment of both commercial and residential properties that have been foreclosed upon or abandoned.

Sales of previously owned homes hit their fastest pace in more than three years in February as the housing market continues its gradual and steady recovery. 

Existing-home sales, which are completed transactions that include single-family homes, increased 0.8 percent to a seasonally adjusted annual rate of 4.98 million in February, the highest level since November 2009, when a home buyer tax credit was in place, the National Association of Realtors (NAR) said Thursday. 

Sales were revised up to 4.94 million in January and are 10.2 percent above levels in February last year. 

Still, sales are lagging behind the 5.5 million that economists say reflects a healthy market. 

"Job growth in the improving economy and pent-up demand are causing both home sales and rental leasing to rise," said Lawrence Yun, NAR chief economist. 

Home builder confidence fell slightly in March over growing frustration of the cost and availability of the supplies they need to pick up the pace of construction. 

As the housing market improves and demand increases for new single-family homes, builders are struggling to get the supplies and labor they need as those businesses try to recover from the prolonged economic downturn. 

That led to a two-point drop in confidence down to 44, according to the National Association of Home Builders/Wells Fargo Housing Market Index (HMI) released on Monday. 

"In addition to tight credit and below-price appraisals, home building is beginning to suffer growth pains as the infrastructure that supports it tries to re-establish itself," said David Crowe, NAHB's chief economist. 

Both chambers of Congress are back to work this week as budget and spending battles continue.

Budgets pushed by both parties will hit House and Senate floors this week. Republicans will look to advance Rep. Paul Ryan’s (R-Wis.) plan, while Democrats mount support for a competing version from Sen. Patty Murray (D-Wash.). Both measures are expected to pass, but it remains to be seen how many party defections will take place. The Hill is tracking votes for both budgets here.

Meanwhile, the Senate will continue looking for a way forward on a continuing resolution to keep the government operating beyond March 27. The top Democrat and Republican on the Appropriations panel had struck a deal on a spending package, but the measure was bogged down by amendments on the floor last week, pushing work on it into Monday at least.

A pair of top Democrats on the House Financial Services Committee is renewing its push to strengthen the finances of the Federal Housing Administration (FHA).

Rep. Maxine Waters (Calif.) and Michael Capuano (Mass.) reintroduced legislation Thursday that would give the FHA more tools to pursue claims against mortgage loan originators with shoddy underwriting or high losses the FHA has assumed as the guarantor on those home loans. Waters is the ranking member of the full committee, and Capuano is the top Democrat on its Housing subcommittee.

A similar measure was cleared by the full House in the last Congress, and Waters called on members to quickly pass it again, clearing the way for further reforms for the FHA.

"Working with the administration, we plan on drafting additional legislation to give FHA more tools to bolster its insurance fund," she said. "But this is an important first step, and should be considered immediately, given that it was supported on such an overwhelming, bipartisan majority in the last Congress."

A bipartisan group of senators are calling on Congress to stop using fees collected by mortgage giants Fannie Mae and Freddie Mac to cover other governmental costs, in an effort to get the ball rolling on housing finance reform.

Sens. Bob Corker (R-Tenn.), David Vitter (R-La.), Mark Warner (D-Va.) and Elizabeth Warren (D-Mass.) introduced Thursday legislation that would prevent the "guarantee fee" collected by the two government-sponsored enterprises from being used to offset government spending. The measure would also block the Treasury Department from selling its preferred shares in the two entities without Congress's blessing and a major housing finance reform in place.

The senators, all members of the Banking Committee, contend that the bill would help remove obstacles that stand in the way of the already complicated matter of housing finance reform. And the legislation, sponsored by liberal and conservative lawmakers, marks a rare bipartisan effort on that front.

Capitol Hill will be a flurry of fiscal activity this week, as a host of major budget and spending documents are unveiled and considered by lawmakers 

Both parties and chambers will release competing budget documents this week, starting with the House Republican budget set for public consumption on Tuesday. House Budget Committee Chairman Paul Ryan (R-Wis.) will host a mark-up of the spending vision Wednesday.

Meanwhile, Senate Budget Committee Chairwoman Patty Murray (D-Wash.) intends to roll out a competing proposal Wednesday, the first from Senate Democrats in about four years. A two-day committee markup sets the stage for its passage Thursday.

The intention is for both budgets to receive respective floor votes before Congress breaks for Easter recess beginning March 22.

A coalition of housing, consumer and civil-rights groups urged Obama administration officials Monday to tread lightly as they consider strict new rules on mortgage lending.

The new regulations now under consideration include a provision that would require borrowers to come up with down payments totaling as much as 20 percent of home prices. The provision would deliver a blow to the lending industry and would-be buyers, especially the working class and people hoping to buy their first house, according to the Coalition for Sensible Housing Policy.

The continued steady pace of the fragile housing recovery is dependent on the market scaling several hurdles. 

As pent-up demand drives the sector's healing, builders are facing tight credit, serious problems in the residential appraisal process and a strained building supply system, according to the National Association of Home Builders (NAHB).

"I talk to many of our builder members who are expressing increasing frustration that they can't get access to construction loans to develop lots in markets where demand is on the upswing," said NAHB Chairman Rick Judson, a home builder from Charlotte, N.C.  

"Not only is this keeping workers sidelined, it is frustrating potential home buyers and slowing the recovery."

Pending home sales rose in January to their highest level in three years as buying is bolstered by a combination of an improving labor market and pent-up demand. 

The contract signings index, a forward-looking indicator that reflects future sales, increased 4.5 percent to 105.9 in January, hitting its highest level since April 2010 when a home buyer tax credit was in place to spur purchases, the National Association of Realtors reported on Wednesday. 

The index is up after December figures were revised down to 101.3. Still they are 9.5 percent above January 2012 when it was 96.7. 

All four regions saw improvements, too, although the West's signings are being held back by a lack of supply. 

Home prices made healthy gains last year as sales picked up pace and the market experienced tight supply. 

Prices rose 7.3 percent in 2012 and were up 6.8 percent in December compared with the same month a year ago, according to the Standard & Poor's/Case-Shiller 20-city home price index released on Tuesday. 

"Home prices ended 2012 with solid gains," said David Blitzer, chairman of the Index Committee at S&P Dow Jones Indices. 

"Housing and residential construction led the economy in the fourth quarter," he said.

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A new housing report is calling for the elimination of Fannie Mae and Freddie Mac as part of a winding down of the federal government's involvement in the mortgage finance business.

The report, released on Monday by the Bipartisan Policy Center (BPC), proposes a multi-pronged plan to modernize the housing sector by expanding private capital in the mortgage market, with a continued but limited role for the federal government, an overhaul of the Federal Housing Administration (FHA) and improvements to rental assistance programs.

Sen. Bob Corker (R-Tenn.), a member of the Senate Banking, Housing and Urban Affairs Committee, credited the proposal for focusing on how to move forward with scaling back the involvement of government-sponsored enterprises Fannie and Freddie, which guarantee more than $5 trillion of the nation's mortgages. 

"It appears to be headed in the right direction by putting substantial private capital in front of the government and resolving the legal limbo of the GSEs," Corker said. "I thank them for their contribution to the conversation, and I hope we get serious and long-term reform this year."

Congress returns for what promises to be a frenetic final week before the sequester hits, with no compromise in sight between the two parties.

President Obama spent the last week with Congress out of session hitting Republicans on the automatic spending cuts, and is demanding tax revenue be part of any replacement, while the GOP contends that they’ve come up with an acceptable alternative made up entirely of cuts.

This week the Senate will likely be occupied by dueling proposals to replace the $85 billion in cuts set to take effect on March 1, but it remains to be seen whether the two parties will scramble for a last-ditch compromise before Friday.

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