Is housing coming back? We’ll get a hint this week

Concerns about the housing market have clouded many investors' optimism about the economic recovery. But after a strong housing starts number on Friday, two key releases in this week could put real estate in a brighter light.

"I'm looking for evidence that the housing recovery is still intact, and that's what I'm expecting to see," said Scott Clemons, chief investment strategist at Brown Brothers Harriman. "I think that the durability of the recovery in housing is impressive. The pace of it leaves something to be desired. But I actually believe that a fair amount of the more recent weakness is weather-related. And I will be proved right or wrong in that belief."

On Thursday, the National Association of Realtors will release April's existing home sales data. And on Friday, the U.S. Census Bureau reports sales numbers for newly constructed homes.

These releases come on the back of Friday's strong housing starts numbers, which came in at 1.07 million units versus expectations of 980,000 starts. However, the news isn't quite as good as that number implies, given that nearly all of the growth was in multifamily homes, while single-family home starts rose less than 1 percent.

Read MoreHousing starts surge, yes, but mostly for apartments

Whether single-family housing will pick up this year is "kind of the $64,000 question," said Jay McCanless, an analyst covering homebuilders for Sterne Agee.

For the analyst, it ultimately comes down to financing.

"The biggest issue right now is that you don't have financial availability like you should for the entry-level buyer to get back into this market," he told "If we see a change in the lending standards, if we see down-payment standards relaxed, that sort of thing," then the market for single-family housing could surge.

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Thursday's existing home sales number, however, could provide a keen hint on where the housing market is headed.

"Existing home sales tend to call the tune for the rest of the market because existing home sales are still 85 to 90 percent of all sales. So if we see prices continue to move higher in the existing-home market, that will be very positive," McCanless said.

At this point, housing is certainly being viewed with trepidation on Wall Street.

"Housing has turned into the real weak link in the American economy," UBS director of floor operations Art Cashin said Thursday on CNBC's "Futures Now." "And it may drag us a little bit further, and prevent the GDP from getting much above 2 percent."

Watch: Cashin: This will make me 'very cautious'

Jim Iuorio of TJM Institutional Services thinks the housing market is actually better than some fear, but adds that for him and many others, "any kind of recovery we have to talk about has to include housing, or else it's not worth its salt."

Clemons uses a psychological argument to explain housing's outsized impact.

"The reason housing is so important is that it is the primary driver of wealth for so many people in this country," Clemons said. "It goes to the question of, 'Do I feel wealthier or not?' The answer to that impacts my personal consumption. And personal consumption is 70 percent of GDP. So that linkage explains why the housing market is so important."

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