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Existing home sales ended stalled in March, dropping from 4.95 million (seasonally adjusted annual rate) for February to 4.92 million for March, according to the National Association of Realtors . Existing home sales in March 2012 reached 4.46 million. It appears that the slowdown is due more to a lack of supply than a drop in demand. From the NAR release: Sales have been above year-ago levels for 21 consecutive months, while prices show 13 consecutive months of year-over-year price increases. Lawrence Yun , NAR chief economist, said there is more demand than supply in the current market. "Buyer traffic is 25 percent above a year ago when we were already seeing notable gains in shopping activity," he said. "In the same timeframe housing inventories have trended much lower, which is continuing to pressure home prices. The good news is home construction is rising and low mortgage rates are continuing to keep affordability conditions at historically favorable levels. The bad news is that underwriting standards remain excessively tight, while renters are getting squeezed by higher rents." Total housing inventory at the end of March increased 1.6 percent to 1.93 million existing homes available for sale, which represents a 4.7-month supply 2 at the current sales pace, up from 4.6 months in February. Listed inventory remains 16.8 percent below a year ago when there was a 6.2-month supply. "The inventory improvement last month results from a seasonal gain, but conditions continue to broadly favor sellers. We need a housing supply of over 6 months to have a generally balanced market between home buyers and sellers, but it's unlikely we'll get there without greater increases in housing construction," Yun said. Read the full release here . And watch Yun address the key findings of the March report here:

Yesterday we looked to the always measured and methodical Tim Duy to explain why he sees a lasting recovery for the U.S. economy . Today we move from an economist to a market analyst: Timothy Holland of TAMRO Capital Partners . Holland is evaluating economic conditions from the investor's point of view. In this interview with the Wall Street Journal 's Paul Vigna , Holland points to improvements in the housing market, monetary policy around the globe, lowered consumer debt, and "slow but steady job creation" as reasons to be optimistic:

Tim Duy doesn't want to be labeled "overly optimistic," but when he looks at the data, he can't help but conclude that the U.S. economy's recovery "is here to stay." The key indicators for Duy include industrial production trending back up, stronger and stronger retail sales, an improving housing market, and falling unemployment (though he does think this is still a problem). Duy: To be sure, I think that fiscal policy will weigh on growth in the first part of 2013. And I think that the European crisis is far from solved (note today's PMI release, not to mention Cyprus). And maybe China will slow further, undermining exports. But as far as the implications for the US economy, I tend to see these events as bumps in the road. They might cause air pockets for equity markets, but are of second or third order importance in the evolution of US activity. Indeed, it seems to me that betting on a recession when the Fed is not tightening is clearly betting against history. Moreover, historically the Fed has inverted the yield curve prior to a recession: And yes, I realize this seems to imply that the US economy cannot have a recession because the yield curve is upward sloping - which of course it has to be when short rates are constrained by the lower bound. But that still doesn't resolve the issue that recessions tend to occur only after a period of tighter policy. As long as the Fed is able and willing to ease in the face of negative shocks - and they have seemed to be willing to do so and have found a solution to the zero bound problem in quantitative easing - I would expect that monetary policy would largely offset most problems that comes down the pipeline. Case is point is the Asian Financial Crisis. I remember predictions of US recession due to the trade shock, but that never occurred. The Fed eased into the crisis, mitigating its impact. The recession only occurred after the Fed revered course and tightened sufficiently to invert the yield curve. Arguably last summer's European shock was the same. The Fed met fire with fire, and recession fears faded. Read The Recovery is Real here .

The Commerce Department released some positive retail spending figures this morning. Sales for retail and food services went up 1.3% in February. Sales are up 4.7% an annual basis. Here's the breakdown: The Washington Post 's Neil Irwin says the release, along with some of the other recent key economic news, is a sign that consumers are feeling much more confident in the state of the economy moving forward: Well, it turns out (as Wal-Mart made clear in its earnings call shortly thereafter), they were just waiting a bit until they received their delayed tax refund checks. The underlying state of consumer spending seems to be strong. But beyond what that tells us about the consumer, think about that in the context of other recent evidence. Friday’s jobs report was quite good, and it followed a series of solid jobs numbers. Employers didn’t sweat the fiscal cliff in December. They didn’t sweat the sequester in February. Housing market indicators—construction, prices, sales—are all pointing up. Put it all together and it’s hard to escape the conclusion that the U.S. economy is finally starting to gain some traction. This fits with the story that what the economy really needed the last few years was to get through some of the headwinds holding it back, namely housing and debt-pinched consumers. Some credit also may be due to the Federal Reserve; its new quantitative easing policies announced in September may be starting to have an impact. Now that housing is supporting growth and debt levels have been pared down, there seems to be some underlying resilience in the economy that even a dysfunctional political system can’t stop. Read Boom! Retail sales are way up. Maybe this economy is stronger than we thought here .

Existing home sales ended 2012 on a little bit of a down note, dropping from 4.99 million (seasonally adjusted annual rate) for November to 4.94 million for December, according to the home sale cheerleaders the National Association of Realtors . Overall, 2012 was a strong year for existing home sales. The NAR's preliminary annual total is 4.65 million--the highest total since 2007. From the NAR release: Lawrence Yun , NAR chief economist, said pent-up demand is sustaining the market. "Record low mortgage interest rates clearly are helping many home buyers, but tight inventory and restrictive mortgage underwriting standards are limiting sales," he said. "The number of potential buyers who stayed on the sidelines accumulated during the recession, but they started entering the market early last year as their financial ability and confidence steadily grew, along with home prices. Likely job creation and household formation will continue to fuel that growth. Both sales and prices will again be higher in 2013." According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage was a record low 3.35 percent in December, the same in November; it was 3.96 percent in December 2011. Total housing inventory at the end of December fell 8.5 percent to 1.82 million existing homes available for sale, which represents a 4.4-month supply 2 at the current sales pace, down from 4.8 months in November, and is the lowest housing supply since May of 2005 when it was 4.3 months, which was near the peak of the housing boom. Listed inventory is 21.6 percent below a year ago when there was a 6.4-month supply. Raw unsold inventory is at the lowest level since January 2001 when there were 1.78 million homes on the market. The national median existing-home price3 for all housing types was $180,800 in December, which is 11.5 percent above December 2011. This is the 10th consecutive month of year-over-year price gains, which last occurred from August 2005 to May 2006, and is the strongest increase since November 2005 when it jumped 12.9 percent. Read the full release here .

We noted on Friday that the Civilian Labor Force Participation Rate was unchanged in the December jobs report. A lot of economists will be watching the participation rate over the coming months as an important economic indicator. Bill McBride , who is expecting a "small bounce" in the participation rate, urges us not to see the flat rate in December as a negative. From Calculated Risk : A key point: The recent decline in the participation rate was expected, and a large portion of the decline in the participation rate was due to changing demographics, as opposed to economic weakness. The second graph (below) shows the changes in the participation rates for men and women since 1960 (in the 25 to 54 age group - the prime working years). The participation rate for prime working age women increased significantly from the mid 30s to the mid 70s and has mostly flattened out since then. The participation rate for women increased slightly in December to 74.5% and might increase a little in 2013. The participation rate for prime working age men has been decreasing for decades - from the high 90s in the 1950s to just over 90% in 2005. In December, the participation rate for men increased slightly to 88.4%. Read the full post here .

With the aim of getting us to focus more on household formation as an important economic indicator, The Atlantic senior editor Derek Thompson shares his choice for most important graph of 2012. It shows the impact of selling cars and houses on recoveries. Thompson makes an interesting point about our current, slow recovery. "This recovery is different from all others because we just. Aren't. Selling. Enough. House." That might be changing. With home prices rising, construction hours-worked recovering, and multi-family homes making a sustained comeback, 2013 could be the year our economy breaks out of "new normal" growth and gets back to "normal normal" growth. Behind my optimism is a trend that doesn't get a lot of play in some corners of the financial press. It's household formation. Household means is a group of people living together. It can be six roommates, a four-person nuclear family plus a grandmother in the guest room, or a a young couple of two. Formation means one more of those categories. More formations is good news. It suggests more people getting jobs, getting apartments, getting married, having kids, and (in all likelihood) spending more money to furnish their new households and express their independence. This recovery, however, has been a story of few jobs, crowded apartments, low marriage-rates, and low birthrates. It all comes down to households. Read The Most Overlooked Statistic in Economics Is Poised for an Epic Comeback: Household Formation here .

Gallup is reporting that Americans' satisfaction with the direction of the country remains above 30%. That may not seem very high, but satisfaction has been above 30% for three months now, following three years below that mark. What we find striking in the latest Gallup report has to do with Americans' views on the economy. While economic matters are the most pressing concern for over 60% of Americans, there is a sharp post-election dip. Take a look: This coupled with the rise in Gallup's Economic Confidence Index suggests the rise in overall satisfaction in the direction of the country has a lot to do with changing confidence in the economic outlook. Take a look at the full report here .