“I think for the short term the people who have the cash will have the advantage. Over the longer haul, I think it will even out. I think the recovery is uneven,” says Howard.

(Read More: Is Multi-Family HomeConstruction Overheating?)

The first builder to report Monday is Virginia-based NVR, with Ryland, Pulte and D.R. Horton continuing through the week. Analysts say Texas-based D.R. Horton, whose stock has recently outperformed its peers, is the one to watch, a bell weather for the group.

“They are the largest builder in terms of the number of closings, and they are in the most markets, so they will probably be able to tell us not only about orders, but also about other things that are important to folks now, like what are material prices doing, how are you negotiating with suppliers,” notes Megan McGrath, an analyst at MKM Partners.

Most of the big builders have seen dramatic growth in new orders, as first time home buyers slowly come back to the market. These buyers are facing stiff competition from all-cash investors in the existing home market, and are therefore looking to new builds. D.R. Horton is an entry-level builder, but has been able to shift product to move-up buyers when the demand is there. Move-up buyers have been moving out of the market of late, despite the overall housing recovery and rising values.

“I think the recovery we’re seeing right now is first-time buyer and the very high end of the market. The move-up buyer has not really shown up as of yet, and if you want to see a very strong recovery in housing we need to see the move-up buyer playing a more prominent role than they are today,” says Richard Smith, Chairman and CEO of Realogy Holdings Corp.

Monthly readings on new and existing home sales are also out next week and will offer more insights into the current strengths and weaknesses of the housing recovery in this crucial Spring season.

(Read More: What’s Holding Up City Home Prices? Boomers)

“In a worst-case scenario, confidence could weaken further and housing starts could mark time,” says Paul Diggle of Capital Economics. “But by far and away the most likely outcome is that the construction industry’s growing pains are overcome and homebuilders break ground on many more sites over the next few years.”

Article source: http://www.cnbc.com/id/100656470

“Industry tailwinds look to be gaining steam, but we believe Toll has one very large impediment to cross: The sequester,” said housing analyst Stephen East at ISI Group. “With a large portion of its sales in the Mid-Atlantic area, the next few months order streams will be extremely important as the sequester knife is falling hard on well-paying defense industry jobs.”

Sequestration could even slow the improvement in the nation’s foreclosure rate. It would result in 75,000 fewer households receiving foreclosure prevention, pre-purchase, rental or other counseling through HUD grants, according to the government agency.

(Read More: The Inside Story of America’s Economic Crisis)

“This counseling is crucial for middle class and other families who have been harmed by the housing crisis from which we are still recovering, and are trying to prevent foreclosure, refinance their mortgages, avoid housing scams, and find quality, affordable housing,” said Secretary Donovan. “Studies show that housing counseling plays a crucial role in those two efforts. Distressed households who receive counseling are more likely to avoid foreclosure, while families who receive counseling before they purchase a home are less likely to become delinquent on their mortgages.”

—By CNBC’s Diana Olick; Follow her on Twitter @Diana_Olick or on Facebook at facebook.com/DianaOlickCNBC

Questions? Comments? RealtyCheck@cnbc.com

Article source: http://www.cnbc.com/id/100474955