Following the news that Morgan Stanley upgraded Home Depot stocks, CNBC sat down with two hardline retail experts to discuss what potential gains in home improvement stocks say about the housing market recovery. According to Stephen Chick, managing director of hardline retail at FBR Capital Markets, lumber prices are beginning to rebound — having seen price increases over the last two to four months not matched since 2004, and that could be a positive, though often-underestimated indicator for housing. Michael Lasser, vice president and senior research analyst of hardline retail at Barclays Capital, pointed to an increased demand for appliances. Lasser said it’s too soon to tell whether indicators from stores like Lowe’s and Home Depot mean a full-fledged recovery, but retailers are certainly benefiting from higher transactional volume, stemming from more people moving to new homes and doing improvements and repairs.

After an $18.9 billion loss in the third quarter, Fannie Mae plans to dip into an emergency Treasury Department fund for the fourth time this year, the Securities and Exchange Commission said yesterday. On top of the $44.9 billion the government-sponsored mortgage giant has already received in emergency financing, the company will ask for an additional $15 billion. The company says it does not foresee a quick end to its losses, and many believe this will not be the last time Fannie Mae will need to be bailed out. Ultimately, Fannie Mae will likely rack up $200 billion in emergency government funds, said Paul Miller, an analyst at Arlington, Va.-based FBR Capital Markets. Shares of Fannie Mae closed at $1.12 yesterday. They peaked at $87.81 in December 2000.