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The long-awaited recovery in housing may have finally arrived.

Existing home sales rose 2.8% in August to an annual rate of 4.82 million units -- the fastest rate since May 2010 and well above analysts' expectations, reports The National Association of Realtors.

Home construction also advanced. Housing starts increased 2.3%, slightly below expectations, but construction of single-family homes, which make up the bulk of the market, grew 5.5% to 535,000 units. That's the highest number of new single-family homes since April 2010.

Another sign of a housing revival: Home builder confidence in September hit its highest level in more than six years, according to the National Association of Home Builders.

The housing market is experiencing "a sustainable recovery now," Kermit Baker, senior research fellow at Harvard University's Joint Center for Housing Studies, told The Daily Ticker. "We've seen a healthy second quarter…even though the broader economy has not really been accommodating."

Just as impressive is the jump in home sales as lenders tighten standards. Mortgage lending fell to a 16-year low last year following the expiration of the first-time home buyer credit in mid 2010, according to federal regulators.

In addition to tighter lending standards, Baker says the housing market faces pressure from "challenging appraisals" due to the large inventory of "distressed" homes—those in or near foreclosure—and from foreclosure sales and short sales, when homes sell for less than the amount owed on their mortgage. Distressed sales, however, are declining and accounted for 22% of existing home sales in August, down from 31% a year ago.

Despite these pressures, Baker expects home prices to rise 3% to 5% over the next couple of years and construction to increase 25% this year and next.

But even at that rate, housing starts will only advance to 1 million units, well below the historic trend of 1.6-1.7 million units, according to Baker.

"We're not even half-way back to where we should be in terms of long-term trends," he says.

He doesn't expect that will happen for another two to four years.

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