The housing market turned in a mixed performance in March, showing surprising weakness in one key area, but unexpected strength in another sector. Here's a rundown.

Housing starts, which had been expected to nudge higher in March, after pulling back modestly in February, instead declined in the most recent month, falling from a downwardly revised 694,000 units in the prior month, on an annualized basis, to just 654,000 homes in March. Initially, the February figure had been reported as 698,000 homes. The March total was 5.8% below the prior month's figure, but was still up by better than 10% from the year-earlier level, attesting to the fact that housing has formed a long and relatively stable base over the past year or so.

At the same time, building permits, a more forward looking metric, rose surprisingly, to an annualized rate of 747,000 homes last month; in February, by comparison, permits had been taken out on 715,000 homes. Actually, permits have now risen for the three months so far this year, and are up from 574,000 units (annualized) in March of 2011, a gain of 30.1% over that time. Also, housing completions, which are a lagging indicator, rose as well last month, climbing to an annualized rate of 600,000 homes. That is 4.2% above the February completion estimate of 576,000 homes. It is also incrementally better than the March, 2011 estimate of completions.

Taken as a whole, this was a good report, with building permits reaching their highest level since September of 2008. Housing starts, while dropping unexpectedly last month, are also well up from their cyclical low of 478,000 homes reached in April of 2009, when the long recession was just in the process of ending, but at a time when the U.S. housing market was still in its worst slump in generations.

In truth, the troubled housing market is getting better, but is still a long way from having its health fully restored. That will take good deal of time--a period that could well run into years, in our view. It will be many years, moreover, before this still-forlorn sector returns to the ballyhoo days of the first decade of this century. Housing was then in a bubble that could take a decade or more to replicate--if even then. For now, our expectation is that a recovery pattern is in place, but that it will continue to be an irregular course, at best.

At the time of this article's writing, the author did not have positions in any of the companies mentioned.