AP

Existing home sales rose for the fourth straight month in a row, now to the highest pace in two years.  Excellent news that buyers are getting off the fence, but they're only getting off at a certain price point. Just like in retail, where the big bargain stores are showing gains, only the low end of the housing market is moving. As I did last month, I asked the Realtors to break down sales for me by price point. Take a look:

A full one third of all sales in July were of foreclosed properties, and as more foreclosures hit the market, you can only expect more downward pressure on prices.  I spoke with Spencer Rascoff of Zillow.com today, who claims, "this is not a real recovery."  Higher sales on one end of the market do not a full recovery make.  Until foreclosures peak and prices bottom, we can't say housing is on its way back up.  That's not to say that increased sales aren't good.  Just think of where we'd be if sales were still falling on the low end, and nobody was eating up all those distressed properties?

This pricing scenario seems like a no-brainer argument for extending the first time homebuyer tax credit.  Now anyone who reads my blog regularly knows I am not a big fan of government bailouts in the housing market.  But if something's working, which this credit clearly is (30 percent of buyers in July were first timers), then we should give it a little more time.  Foreclosures are only increasing, as we saw from yesterday's Mortgage Bankers Association report, and that will mean more inventory at the low end.  Let's keep it moving.