The housing market is now 64 percent of the way back to “normal,” and we are entering the third phase of the recovery, according to Trulia’s monthly Housing Barometer.

The first two phases of the recovery began in 2009 and 2012, respectively. The milestone marking the first phase was when sales and construction first started to pick up. The second phase began when home prices reached bottom and began to increase.

The third phase began this spring after housing inventory bottomed out and both inventory and mortgage rates began to climb, according to Trulia.

What we’re waiting on now, according to Trulia, is the fourth phase, in which “young adults finally start moving out of their parents’ homes.”

“Until this happens, construction and new home sales will remain well below normal – even though prices and existing-home sales are now very close to their normal, sustainable levels,” Trulia stated.

Existing home sales are 94 percent of the way back to “normal,” pre-bubble levels, according to Trulia’s Housing Barometer, which measures three indicators – existing home sales, construction starts, and the delinquency-plus-foreclosure rate.

Existing home sales rose 17 percent year-over-year in July to their second-highest level in six years.

Construction starts and the delinquency-plus-foreclosure rate are improving but are not as close to normal yet.

Construction starts are 41 percent of the way back to normal after a 6 percent monthly increase in July.

Single-family home starts rose 20 percent year-to-date in July, while multi-family starts rose 33 percent.

The delinquency-plus-foreclosure rate is a little more than half-way back to normal—56 percent of the way as of July.

The rate stands at 9.23 percent, the second-lowest level in nearly five years, according to Trulia.

By Krista Brock