The stage is set for the nation’s housing economy to recover, but the recovery has not yet begun. That’s the consensus of a Webinar today from three of Standard & Poor’s economists after presenting the latest data.

Robert Keiser, Vice President of Global Markets Intelligence at S&P Capital IQ, said it is too soon to say the housing markets are in recovery. ‘Homeowners’ credit situation has improved greatly since the bust and there is no supply hangover-inventories have dropped to 2.2 million from 3.3 million in July 2006. Supply is normalized. New homes are at their weakest since 1981, he said.

“The key question for the housing recovery is consumer confidence and the key to consumer confidence is job creation. We need two or three months of payroll growth. There is lots of talk about recovery but when we here that buyers are losing out on homes, they will start to drive prices up,” said Kaiser.

Prices will define whether or not we are in a recovery and it is one of the last indices to recover. So far, prices are at the same level as ten years ago, David Blitzer, Managing Director and Chairman of the S&P Index Committee at S&P Indices. He noted that on the buy-or-rent ratio, prices slipped back into buy territory recently, but not by much. Foreclosures have declined substantially, Blitzer said, but the price declines they bring about scare off buyers who decide to wait for lower prices.

“We are recovering, but as far as being in a recovery goes, we’re not there yet,” he said.