Trulia: Market is 32% of the way back to normal

We've heard a number of analysts say recently that the housing crisis is over, that home values have hit bottom and are on the way up. We've also heard from a few analysts who disagree.

If the market is recovering, just how far has it come toward normal?

According to Trulia, the real-estate portal, the market is 32% of the way back to normal.

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That's not as good as things looked in the past five monthly Housing Barometer reports, but it's considerably better than the results of June 2011, when the indicators showed the market was only 22% back to normal.

• New-home sales drop 8.4% after 2 months of gains

And just what is normal? For the purposes of this monthly report, Trulia defines normal as "pre-bubble levels," and then measures how much the situation has improved since the bottom. The report looks at housing starts, existing home sales and the delinquency/foreclos​ure rate.

In June, housing starts were up 24% over June 2011. That puts housing construction at 28% of the way back to normal.

• Zillow: Housing market has turned around

Existing-home sales fell significantly from May to June, reflecting the low inventory. Existing-home sales, which were measured at 49% of normal in May, were down to 35% of normal in June. "That’s a big slide," Trulia chief economist Jed Kolko wrote. "Tighter inventory, especially of distressed homes, held back sales."

• Number of homes for sale drops 19% in a year

The percentage of mortgages that are delinquent or in foreclosure also rose slightly in June, to 11.23% from 11.08% in May. That puts the delinquency-foreclos​ure rate at 34% of the way toward normal.

Putting the three indicators together, the market is 32% back to normal, down from 37% in April 2012.

Should you be worried about the slide? Writes Kolko:

Depends who you are. We’re farther from normal mostly because of the big drop in home sales, which was due to tightening inventory: Fewer homes for sale means fewer sales. However, tighter inventory is part of the process of recovery. In fact, inventory nationally is now near its long-term normal level – even though it is tight relative to several years of unusually high inventory. Tighter inventory is good news for sellers, who face less competition. But it’s bad news for buyers, who face fewer choices and higher prices.

His conclusion: "The housing barometer shows that the road to recovery is bumpy and uneven."