After four months of gains in existing home sales, July saw a dip of 2.7 percent in home resales, a slight speed bump for the recovering housing market.

While today's news does cast a small shadow on the hopes of a housing rebound, there are still plenty of reasons to think that the housing market has bottomed out.

Toll Brothers (NYSE: TOL - option chain) stock is falling today after the National Association of Realtors announced existing home sales fell 5.3 percent in January to a seasonally-adjusted annual rate of 4.49 million, the lowest level in 12 years. Analysts had expected a slight uptick in existing home sales. If you think this stock won't be rising too far in the coming months, then it could be a good time to look at a bearish hedged play on TOL.

This morning, TOL opened at $16.87. So far today the stock has hit a low of $16.12 and a high of $16.98. As of 11:50, TOL is trading at $16.57, down 48 cents(-2.8%). The chart for TOL looks bullish and S&P gives TOL a positive 4 STARS (out of 5) buy ranking.

Minyanville contributor Andrew Jeffery dares to share the kind of keen insight and actionable information you won't find in any prospectus. For more original thought, visit www.minyanville.com.

Put on those rose-colored glasses, it's time again for the Existing Home Sales data:

• September sales came in 5.5% higher than the previous month, at 5.18 million (annualized) compared to estimates of 4.95 million.
• Sales were 1.4% higher than last year -- the first year-over-year increase in three years.
• Inventory shrank to 9.9 months worth, from 10.6 months.
• Median home price dropped to $191,400, the lowest since April 2004.
• Distressed sales made up 35-40% of sales, with 80% of those going to owner-occupiers (higher than the usual 75%).

Per normal, the National Association of Realtors chief economist Lawrence Yun is as optimistic as ever. He gets paid to obfuscate the truth.

Per normal, the National Association of Homebuilders chief economist David Seiders is as pessimistic as ever. The worse it is, the better chance his group gets on the government dole.

It's messy out there in housing land, but that's not exactly news. Keep in mind that the year-over-year numbers line up against this time last year, when credit markets first seized up and home buying all but evaporated for a couple months. Easy comparisons make for premature bottom call.

In the current housing market, it has been hard to find any sort of silver lining, but we do see a little positive news today, as existing home sales in July jumped more than expected, mainly due to lower home prices.

During July, sales of existing homes rose by 3.1%. This was well above the 1.6% that Wall Street was hoping to see, but analysts caution against assuming that this is a sign that the market has finally bottomed out. Despite beating Wall Street estimates, we still have to consider the fact that home sales were over 13% lower than the same period a year ago.

While we can view the July sales figures as promising, we must also take a minute to look at home inventories, and here the picture is not so rosy. Here we see that the number of unsold single family homes is running at all time highs. Currently the market is trying to deal with a total of 4.67 million unsold homes. This is the highest level that we have seen since 1968 when the National Association of Realtors started monitoring the data.

Several major pieces of economic news were released this morning, and all were good. Personal Spending rose more than expected, the fastest growth in two years. The Chicago PMI report rose more than expected as well. The Michigan Consumer Sentiment report seemed to hold its own. In addition, the core inflation number came in within the Fed's target range.

This is a major contrast to the numbers earlier in the week. Durable Goods and Consumer Confidence reports were terrible, and both Existing and New Home Sales indicated that there appears to be no end in sight for the housing slump. The only good number was Second-Quarter GDP. However, this was prior to the turmoil created in the markets by the credit crisis.

Then, why did the stock market rally on the bad news and is going down today on these positive economic reports? It's the liquidity. The stock market is driven by money and credit. As there is greater availability and lower cost, the market performs better. Who is the ultimate gatekeeper for this? You guessed it: the Federal Reserve.

Existing home sales took a dip again last month, the fifth straight month in a row, and are now running at a five-year low. It wasn't as big of a drop as many analysts had been expecting, but we did see a 0.2 percent decline, taking the annual rate of 5.75 million units.

Along with a drop in existing home sales came another drop in home prices. With the decline in prices last month, we have now seen existing home prices fall for twelve straight months in a row. The average last month dropped down to $230,200, an 0.6% drop from the same month last year.

Not all areas of the country went through further deterioration though. When the nation first started to undergo a housing slump, the effects were initially noticed in the East, now this area has been steadily improving. Last month the region saw not only rising existing home sales, but also an increase in home prices.

We see some more weakness in the housing market again today, indicating that the rough times are still not close to coming to an end anytime soon. The National Association of Realtors announced today that existing home sales fell by more than expected during the month of April.

According to today's report, existing home sales fell by 2.6%, which puts us at the lowest annual sales rate in the last four years at 5.99 million units. In reaction to the fall in home sales, we are also given data that the average price for home sales dropped in the month. This represents the ninth straight month that home prices have dropped.

Earlier this month I wrote about a release from the NAR that predicted that 2007 had the possibility of being the first year in history to show a drop in home prices. I would have to agree that we are well on our way for the first annual drop in prices. The current nine month streak of falling prices is the longest streak in history and right now no one is expecting to see this trend reverse in the near future.

April's median home price fell to $220,900 which is down 0.8% from the same month last year. According to the report earlier this month from the NAR, they are expecting that the average price for homes sold to fall down to $219,800 by the close of this year.

Michael Fowlkes has worked as a stock trader for seven years and spent the last two years working as an analyst for the online investment advisory service Investor'sObserver.