Signs of revival are becoming evident in housing markets around the country, but there are still a number of obstacles to a true recovery, according to “The State of the Nation’s Housing” report released today by the Joint Center for Housing Studies (JCHS) of Harvard University.

“While still in the early innings of a housing recovery, rental markets have turned the corner, home sales are strengthening, and a floor is beginning to form under home prices,” said Eric S. Belsky, Managing Director of the JCHS.

Belsky said homeownership continues to be a major life goal for most young adults, but that they have been waiting for the job and housing markets to stabilize before making an investment in a home. “But as markets tighten, these fence-sitters may begin to take advantage of today’s lower home prices and unusually low mortgage rates,” he said.

The report warns that home markets continue to face a number of challenges, including a backlog of almost two million homes in the foreclosure process that will most likely keep distressed sales elevated and could keep price increases in check in areas hit hard by foreclosures. Homeowners who owe more on their mortgages than their homes are worth may also stunt growth in the housing market.

The number of households spending more than half their income on housing has risen to record heights behind a combination of the inability of many homeowners to refinance, rising rents, and high unemployment.

“While improving housing markets will benefit the economy and many existing homeowners, it will also increase the cost pressure on others,” said Chris Herbert, director of research at the JCHS.  “Even as the recovery takes hold in many markets across the country, we cannot lose sight of the long-run challenge of providing affordable housing for the most vulnerable, nor forget the damage done to foreclosure-ridden neighborhoods, which will take years to heal.”