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In my 2013 economic prediction, I made the following observation about housing:

Housing will continue to rebound. Inventory of both new and existing homes are both at far more realistic levels and the Fed is driving down interest rates with its MBS program. Housing affordability is at levels not seen in a very long time and builder confidence is rising. Put all of these factors together and it appears that housing should remain on the comeback trail for most of next year.

CR published the following graph of total housing inventory earlier today:

(click to enlarge)

Notice that it's taken between five and six years for the economy to get here. That's a tremendously long adjustment process, during which the economy has suffered a tremendous amount of pain.

Source: Housing Inventory Continues To Drop