Existing homes are starting to move again. Last month, home resales hit their highest level in more than two years, thrashing expectations. The 9.4% increase in home resales -- which entails a seasonally adjusted rate of 5.57 million -- is attributed largely to the deadline for the first-time home buyer tax credit.

According to the National Association of Realtors, the annualized, seasonally adjusted rate is up from the 5.1 million in August and far ahead of the 5.35 million expected for September (based on economists surveyed by Thomson Reuters).

A year ago, Manhattan homeowners lived within the firm grasp of the worst recession in 70 years. A skyrocketing real estate market seemed ready to come back to Earth, as carnage in the financial services industry – which spread to just about every other business – decimated incomes and net worths throughout the city.

From the second quarter to the third, this year, the sale of co-ops and apartments spiked between 46% and 69% according to several reports from the real estate business. Sales are still lower than last year, but the recovery has been nothing short of amazing (to the chagrin of those of us who had dreams of one day moving up from the rental class).

Prudential Douglas Elliman reported a price increase of almost 2% from the second quarter, though the median was down 8% to 18% from last year – to the $760,000 to $850,000 range. Jonathan Miller, president and CEO of Miller Samuel Inc., a real estate appraisal and consulting firm, calls this good news, but cautions that it doesn't mean we're at the bottom.

The market seems to want to go up each day as it has relentlessly almost every trading session since April. But yesterday, it had a tiny setback after the FOMC announcement. Today the culprit was housing. The National Association of Realtors said existing home sales declined 2.7% in August. Every economist worth his salt said the number would rise.

Good news on the unemployment front did give the market an early boost this morning. Within an hour, though, bad news on the housing sales front wiped out the gains and moved the major indices into negative territory, where they have remained.

Here were today's unofficial closing numbers:

Dow 9,706.99 -41.56 (-0.43%)
S&P 500 1,050.78 -10.09 (-0.95%)
Nasdaq 2,107.61 -23.81 (-1.12%)

According to the National Association of Realtors (NAR), sales of pre-owned homes increased 5.1% in February -- bringing the seasonally adjusted annual rate to 4.72 million units in February. The NAR attributed the growth to "deep price discounts." The percentage gain was the largest since July 2003, but sales are still down 4.6% during the past 52 weeks.

A survey by MarketWatch showed expectations for a decline to 4.45 million from January's 4.49 million rate. In the past year, the median sales price for homes fell 15.5% to $165,400 -- logging the second largest year-over-year price drop ever. The largest year-over-year price drop logged was January's drop of 17.5%. The inventory of unsold homes increased 5.2% to 3.80 million, which is a 9.7-month supply at February's sales pace. More often than not, inventories increase 5% in February -- but such data is not adjusted for seasonality.

We all know that the real estate market is in trouble, and another sign of just how bad things are came out today as the National Association of Realtors announced another steep drop in home prices during the fourth quarter.

The NAR started keeping comprehensive data on home sales back in 1979, and in that time period there has not been another quarter that saw home prices drop as much as they did in the fourth quarter of last year. So just how much did values drop? A massive 12.4%.

The U.S. housing sector has just experienced its worst year, from price and inventory standpoints, in more than two decades. Moreover, 2008 followed a poor housing sales year in 2007.

Various real estate stakeholders are filling the airwaves with ads that pitch, 'Now is a good time to consider buying a home,' 'Housing affordability is improving' and 'On average, a residential home appreciates in value over 10 years.'

But sans the promotional hype and real estate sales stakeholder-based ads, is now a good time to buy a house in the United States?

Just call the December 2008 existing home sales data an upside / downside report: On the upside, sales rose 6.5% to a seasonally-adjusted annualized rate of 4.74 million units, the National Association of Realtors announced Monday. On the downside, the median sales priced plunged a record 15.3% compared to a year ago to $175,400.

Economists surveyed by Bloomberg News had expected December 2008 existing home sales to total a 4.4-million-unit annualized rate.

Further, for all of 2008, median prices declined 9.3% to their lowest level since 2004. Also in 2008, existing home sales totaled 4.91 million units, a 13.1% drop from 5.65 million units sold in 2007. The 4.91 million 2008 total is also the lowest since 4.37 million units were sold in 1997.

One unqualified bright spot: home inventories, which declined 11.7% to 3.68 million units, or about a 9.3-month supply at current sales rates, down from an 11.2-month supply in November 2008.

Housing Sector / Economic Analysis: The recession -- and the financial crisis, for that matter -- began in housing; perhaps the recovery will begin there, as well. Prices continue to decline, but the decrease in existing home inventories is a positive: if inventories continue to decline in the coming months, that could signal better days ahead in construction. Inventories of both existing and new homes must decline further before home builders can consider increasing construction. Stay tuned.

One holiday wish by investors -- and business executives -- should be for a U.S. economic recovery, starting with the housing sector.

That's because the housing sector showed few signs of renewal in November, as the median sales price of existing homes plummeted 13.2% to $181,300 on a year-over-year basis, the National Association of Realtors announced Tuesday. In November 2007, the median price was $208,800.

By region, the median existing home price in November dropped 0.1% in the Northeast to $257,700, decreased 25.5% in the West to $242,500, dropped 10.6% in the South to $154,500, and declined 11.2% in the Midwest to $142,200.

Meanwhile, sales of existing homes sank 8.6% in November to a 4.49-million-unit annualized rate. Sales have declined 10.6% on a year-over-year basis.

Equally distressing, the number of existing homes on the market in November rose to an 11.2-month supply at the current sales rate, up from a 10.3-month supply in October. A typical healthy market has a three to five month supply.

Home prices are 'not delightful'

Economist Peter Dawson said the weather outside is frightful, and home prices are not delightful.

Are U.S. homes undervalued? A new survey suggests they are, but don't confuse that fact with 'a good time to buy a home.'

U.S. home prices fell at a 6.9% annual pace in Q3, and are down 6.5% from their 2007 peak, with prices falling in 241 of 330 metropolitan markets, a survey by IHS Global Insight shows, marketwatch.com reported. Further, compared to their long-term fundamental values, U.S. homes are now 3.8% undervalued.

Undervalued homes? Yes, but...

Undervalued, yes. But does undervalued mean U.S. home prices are not likely to fall further? BloggingStocks asked economist Peter Dawson for an assessment.

"Home prices most certainly can fall further, and will continue to do so in most markets over the next year," Dawson said. "Potential home buyers have to keep in mind that just because a home in, say, Miami was $725,000 last year and is priced at $600,000 this year, and is 'undervalued,' that doesn't mean it can't fall to $500,000 or less by next year. And the price trend in most markets remains down. Home buyers need to keep sight of that."

The the most-pressing question after the National Association of Realtors announced a 3.1% October sales decline in existing homes: has the housing market bottomed?

Unfortunately, for home sellers and the nation, the answer is no, so says economist Peter Dawson.

Sales fell to 4.98 million units, on an annualized basis, the NAR said. Even more troubling, the median home price plunged 11.3% to $183,300 in October, from $206,700 in October 2007.

Economists surveyed by Bloomberg News had expected existing home sales to decline to a five-million-unit annualized rate in October.

Further, it was the largest year-over-year median home price drop since the NAR started keeping records in 1968. Meanwhile, inventories rose to a 10.2-month supply in October at current sales rates, up from a 10-month supply in September, the NAR said.

When is a near double-digit decline in home prices viewed as a small victory? When you're the United States in late 2008 -- a nation grappling with its worst housing slump in decades amid signs of a deepening recession.

U.S. median home prices fell 9% in Q3 compared to a year earlier, to $200,500, the National Association of Realtors announced Tuesday. Prices fell in 120 U.S. metro areas, rose in 28 and were flat in four.

California registers major declines

The largest decline in home prices occurred in California: the Riverside-San Bernadino area recorded a 39.4% decline, to $227,200; the Sacramento area, a 36.8% decline to $212.000; and the San Diego area, a 36% plunge to $377,300.

At the other end of the spectrum, prices rose 12.5% in Elmira, N.Y, and 8.7% in Decatur, Illinois.

Economist Peter Dawson said today's NAR statistics represents more, sobering data from the housing sector, but in the broader context the report is not as bad as the quarterly data implies.

"We're down 9%, but it's less than what most feared, so that's a positive development, sort of," Dawson said. "We've experienced so many jolting, double-digit price declines in home prices and other negative stats from the sector that anything less than the truly abysmal looks modest, and that's the case with the Q3 NAR data."

People buying a home for the first time are usually young. They are probably at the beginning of their careers, which means that they do not have much money. In a recession, they would seem to be poor credit risks. For these people, getting a home mortgage should be nearly impossible.

But, a recession does strange things and turns some assumptions on their heads. It turns out the the lower end of the real estate market is getting so cheap that buyers can pick and choose an incredibly large inventory which, in many cases, sellers have to dump at any price.

According to the AP, "First-time buyers are much more flexible in entering the market because they aren't concerned about selling an existing home," National Association of Realtors Chief Economist Lawrence Yun said in a statement. Good point. Most people can't sell their current homes. They won't be in the market for a new one at all. Because of that, dynamic first-time buyers represented 41% of all real estate transactions in 2007.

There is a bit of hidden good news in the NAR analysis. First-time home buyers have a "plentiful" supply of unusually inexpensive homes and an unprecedented opportunity to negotiate on price. As the "retail value" mid-priced and higher-priced homes continues to drop, buyers will come back into those markets as well. Some of the opportunities will just be too good to resist.

Douglas A. McIntyre is an editor at 247wallst.com.

Sales of existing homes in June fell 2.6%, to a seasonally-adjusted annualized rate of 4.99 million - - the lowest level in 10 years - - the National Association of Realtors announced Thursday.

Economists surveyed by Bloomberg News had expected June existing home sales to total a 4.94 million annualized rate. The annualized rate totaled 4.99 million units in May; a year ago, in June 2007, it was 5.75 million units.

Meanwhile, the national, median, existing home price for all housing types was $215,100 in June, down 6.1% from a year ago when the median was $229,000.

Existing home sales varied by region. Sales rose 1% in West, but fell 6.6% in the Northeast, 3.4% in Midwest, and 3.1% in the South.

'Bad time to be a home seller'

Economist Peter Dawson said the June existing home sales statistic shows that the housing market remains a buyer's market.

"No question, it's a bad time to be a home seller. Existing home prices continue to slide in most markets, and there's little in the data to suggest a turnaround, given the U.S. economy's doldrums," Dawson said. "My advise for those who are in the market to buy and don't have to buy a house right now - - wait it out, quarter by quarter. Prices in your market could drop considerably."

Pending sales of existing homes in April 2008 rose 6.3%, to a seasonally-adjusted annualized rate of 4.89 million, the National Association of Realtors announced Monday. A pending sale is one in which a contract was signed on an existing home, but not yet closed.

Economists surveyed by Bloomberg News had expected April pending home sales to fall 0.4%. The NAR said its pending home sales index rose 6.3% to 88.2, its highest level in six months. The pending homes sales index fell in March and February.

However, even with Monday's surprising April statistic, pending home sales are still down 13% from April 2007.

Economist Peter Dawson said home buyers / sellers should not conclude that the U.S. housing market is in recovery "until both sales and median prices rise for several consecutive months" across the United States.

Pending home sales varied by region. Sales rose 13% in the Midwest, 8.3% in the West, and 4.6% in South; sales fell 1.9% in the Northeast.

Economic Analysis: A surprisingly positive April existing home sales report. Still, as economist Dawson outlined, economists underscore that one shouldn't read too much into one monthly statistic, given it's a short snapshot of housing conditions, and due to likely revisions. One should also evaluate the April number in the context of the long and wide U.S. housing downtrend: sales had fallen so low that any uptick would register an increase, and that may very well have been the case in April, particularly if the existing home segment registers decreases for May, June, July, and August -- prime selling / family relocation months in the United States.

Sales of existing homes in April 2008 fell 1.0%, to a seasonally-adjusted annualized rate of 4.89 million, the National Association of Realtors announced Friday, as inventories of homes swelled to a 23-year high.

Economists surveyed by Bloomberg News had expected April 2008 existing home sales to total a 4.85-million annualized rate. The March 2008 sales rate was revised higher to a 4.94-million annualized rate.

Even more telling, inventories -- unsold homes and condominiums -- rose to an 11.2-month supply at the current sales rate. A typical, healthy housing market has a three to four month supply of unsold homes on the market.

Further, the inventory of single family homes rose to 10.7-month supply - - its highest level since 1985. Meanwhile, the inventory of condominiums increased to a 14.2-month supply.

Also, the median sales price for houses and condominiums fell to $202,300 in April 2008, an 8% decrease from the $219,900 median recorded a year ago.