see "U.S. Economy: Sales of Previously Owned Homes Unexpectedly Rise" (Bloomberg, 3/23/06)
http://quote.bloomberg.com/apps/news?pid=10000103&sid=athYzo8HpacQ

and "Many Recent Homeowners Lack Any Equity While Housing Peaks" (IBD, 3/22/06)
http://investors.com/editorial/IBDArticles.asp?artsec=5&issue=20060322

and this interesting take from the National Association of Realtors:
http://www.realtor.org/publicaffairsweb.nsf/Pages/EHSFeb06?OpenDocument

Existing home sales rose an unexpectedly strong 5.2% in February to a 6.91 million unit annual rate. A few factors might explain the number, including good weather in December and January (existing home sales are reported at closing, not at contract signing).

However I am still not optimistic about housing in general. Mortgage rates have risen since then, and although the Bloomberg article mentions inventories being stable on a monthly rate basis, inventories did go up over 5%...a large number in my opinion.

Also, the Bloomberg article mentions prices going up 10.6% year over year to $209,000, but they neglect to mention that the median price is down 0.5% from last month, representing the 5th month in a row of decreasing median home prices.

As usual, my friend Brian Wesbury is more sanguine about housing than I am:

Like the basketball team that keeps marching through the NCAA tournament, the housing markets once again surpassed forecasts that assume this incredible run is about to end. The stated goal of many coaches during March Madness is "survive and advance" and that is what the housing market has done for another month. Yes, rising interest rates are beginning to take their toll on mortgage applications (down 14.2% in the past year) but this is not a one-star team. Demographic trends, a robust economy, rising wealth and favorable tax policy are long term factors that should continue to support housing activity. As a result we are not worried about a national collapse in the housing market. We expect existing home sales will remain near the 6.5-7.0 million level for most of this year and price appreciation will pull back to around 5%. Separately, initial claims for unemployment benefits fell by 11,000 last week to 302,000. This is yet another sigh that the labor market is tightening.

Investors Business Daily reports on a (somewhat questionable) study which estimates "that $297 billion worth of 2004-05 adjustable-rate first mortgages could end up defaulting — resulting in $110 billion in lender losses."

For those of you who aren't familiar with negative amortization loans, that is where a borrower can make payments early in the life of the loan which are actually less than the accrued interest due, with the difference added on to the loan amount. So, if a borrower has a $200,000 loan with a monthly payment of $1,264 due under a standard 30-year amortization at 6.5%, some loans allow the borrower to pay less, say $500, with the additional $764 added to the balance of the loan. In other words, every month that goes by, the borrower is further and further in the hole. If the housing price is not increasing faster than the borrower's debt (which it almost certainly isn't these days), this borrower is digging himself into a hole he will probably not get out of without extreme financial pain...including a real chance of losing the house.

The increase in these sorts of loans and the fact that so many borrowers are so obviously overextended as to need this sort of loan make me think the housing market still has much more serious and long-term risk than Brian's calm view.