With home prices and household formations rising and household balance sheets healing, the ongoing housing recovery is expected to gain momentum next year as several challenges remain.

Helping spur the housing rebound was a double-digit increase in home prices over the past year, driven in part by tight inventories of new and existing homes for sale and gradual gains in employment.

Another bright spot is rising household formations that were delayed during the downturn as college graduates and young professionals were forced to move back in with their parents.  At the height of the housing boom, the U.S was producing 1.4 million additional households every year.  That figure plunged to 500,000 during the depth of the recession and today is now back up to 700,000.

Single-family production is expected to rise 17 percent this year to 629,000 units, jump an additional 31 percent next year to 826,000 units and surpass 1 million mark in 2015.