AP

I am more convinced than ever today that the housing recession is fueled by a lack of confidence, and I am also more convinced than ever that restoring confidence in housing is going to take a lot more than just shoveling money at the banking industry.

Existing home sales fell 2.2% in August from July. That means nothing. Home sales have not moved at all since December of 2007.

A little up, a little down each month, but essentially sitting at an average annualized rate of 4.93 million units. Wait--so 4.93 million homes are going to be sold this year? That’s not so bad, right? Wait again--1.97 million of those, conservatively speaking, are distressed sales, i.e. foreclosed homes or short sales of homes whose sellers have no choice.

Okay, so still 2.96 million regular homes will be sold this year. That’s not terrible, right? I guess not, unless you want to consider the fact that three years ago more than 7 million homes changed hands in one year, with foreclosure rates at historic lows.

It’s the mortgage problem though, right? And the falling prices, right? Well, mortgage rates have actually come down 75 basis points in the past five weeks, but mortgage applications last week dropped almost 11%.

Oh, and about the prices, well prices are down 24% in the West, and that’s spurring sales in really distressed markets like Sacramento, San Diego and Las Vegas. But in other cities, like Atlanta, Chicago, Nashville, Milwaukee, where prices didn’t go up much during the boom and aren’t down that much now, sales are falling off a cliff, down more than 20 percent, according to the National Association of Realtors.

• Existing-Home Sales Slide on Tight Mortgage Availability
• How Will the Bailout Work? No One Actually Knows

Now wait. I always get yelled at by you fine readers for suggesting that the housing meltdown is occurring anywhere outside Miami, Phoenix, Vegas and California. So if mortgage rates are favorable, and price drops aren’t a huge issue in these other markets, then why are so few homes changing hands? It’s the confidence, stupid. Sorry, the lack thereof.

• Housing grim as financial rescue debate rages
• US home sales, prices fall in August

What’s all this bank consolidation going to do? Oh, yeah, mess up lending even more. And what’s all this 700 billion dollar bailout going to do? Oh, yeah, devalue homes even more by footing the bill for borrowers who never should have bought their high-priced homes in the first place. And what’s this inevitably recession going to do? Oh, yeah, put more people out of work so they can neither buy nor afford a home.

Confidence. Can you really buy it? I don’t think so.

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