Driven by rising home prices and growing demand, the U.S. housing recovery is well under way, says The State of the Nation's Housing report released late last month by the Joint Center for Housing Studies of Harvard University, in Cambridge, Mass.

While still at historically low levels, housing construction finally has turned the corner, giving the economy a much-needed boost, the report says. But even as the recovery gains momentum, millions of homeowners are still delinquent on their mortgages or owe more than their homes are worth, and severe housing cost burdens have set a new record.

Driven by an increase of 1.1 million renter households, last year marked the second consecutive year of double-digit percentage increases in multifamily construction. But the flip side of the strong rental market was the continued slide in homeownership rates.

"Even as historically low interest rates have helped make the monthly cost of owning a home more favorable than any time in the past 40 years, the national homeownership rate fell for the eighth straight year in 2012," says Eric S. Belsky, managing director of the Joint Center for Housing Studies. "The drop was especially pronounced for 25 to 54 year olds, whose homeownership rates were at their lowest point since recordkeeping began in 1976."

Chris Herbert, director of research at the Joint Center for Housing Studies, says, "Tight credit is limiting the ability of would-be homebuyers to take advantage of today's affordable conditions and likely discouraging many from even trying. At issue is whether, and at what cost, mortgage financing will be available to borrowers across a broad spectrum of incomes, wealth, and credit histories moving forward."

While the recovery is good news for many, the number of Americans shelling out half or more of their income on housing is at an all-time high. At last count, 20.6 million households were shouldering such severe burdens, including nearly seven out of 10 households with annual incomes of less than $15,000, which is roughly equivalent to year-round employment at the federal minimum wage.

The report says, however, that even as the need has never been greater, federal budget sequestration will pare down the number of households receiving rental assistance.

"With rising home prices helping to revive household balance sheets and expanding residential construction adding to job growth, the housing sector is finally providing a much needed boost to the economy," Belsky says. "But long-term vacancies are at elevated levels in a number of places, millions of owners are still struggling to make their mortgage payments, and credit conditions for homebuyers remain extremely tight."

He adds, "It will take time for these problems to subside. Given the profoundly positive impact that decent and affordable housing can have on the lives of individuals, families, and entire communities, efforts to address these urgent concerns ... should be among the nation's highest priorities."