As we noted yesterday, the housing market is still a long way from being in solid ground, but we are starting to see more signs that things are turning around, and as the market improves, the overall economy is going to benefit. Construction companies are hiring more people to keep up with the rising demand, and in the process giving the economy a slight boost. For the first time in over 3 years, the housing market is in a position to help the nation's economic output.

However, we must remain cautious before getting too excited about the current situation. Yes, a five month straight increase in single family homes is encouraging, but the level is still a pretty hefty 70% below its peak back in January 2006. On the bright side ... construction is now 37% above the lows of last winter, so things are starting to improve, albeit very slowly.

We also have to consider the news we were given today that apartment construction dropped by 13% from June to July. When you combine the figures for new single homes and apartments we see a drop of 1%, so depending on how you look at the news you could see the good or the bad, but at least there are good sides to the situation that were not there a few months ago.

Yesterday we looked at a few reasons why the housing market has been improving, one of which is the $8,000 incentive that the Obama administration is offering to first time new home buyers. The concern is that in order to receive this incentive, the deal has to close by the end of November, and July was the last month that homebuilders can start new homes that would qualify for the incentive.

The big question obviously is whether or not construction starts will continue to improve once the incentive has been removed from the market.

There is definitely a lot of pressure on Congress to extend the incentive program, and we should expect to see some fallback if the program is not extended, but just how much fallback occurs is unclear.

Should Congress extend the incentive program? Do you think that the housing market is just temporarily improving due to the incentive program, and we should expect to see the market crash once again once the incentive goes away? Or are we seeing real signs that the real estate market has hit bottom and will continue to improve in the months to come?