Thanks to all the streaming feeds of constant news I'm subjected to, I just clicked on a CNBC story titled, Four Years Later, Housing Market Shows Signs of Life." I was curious, seeing as I write about housing for CNBC, and I didn't write that. It's a Reuters piece, and I don't buy it.

But wait, what about this morning's report of an 11 percent jump in sales of newly built homes and last week's report of a 4 percent jump in sales of existing homes; March was a great month, right? A little perspective, please.

Yes, the numbers are going in the right direction, but only after big, albeit partially revised, drops in February. We're working off a bottom here, and we're still bumping around it. My concern, as it has been for years now, is distressed properties. Foreclosures and short sales (where the home is sold for less than the value of the mortgage) are ruling the roost, and that is not good news for home prices, which are still dropping, despite this one month of rising sales. Sales are all well and good, but prices are key in so so many ways.

For existing homes in March, the bulk of the market, 35 percent of all transactions were all-cash (that's a new record), and 22 percent were sales to investors; investors don't necessarily want to hold on to these properties for very long, so they may come back on the market again soon.

But back to the distressed properties. While the National Association of Realtors says 40 percent of March sales were distressed properties (up from 39 percent in February and 35 percent a year ago), another survey from Campbell/Inside Mortgage Finance finds nearly half of all homes on the market are distressed. Short sales are "booming" according to the same report up to nearly 20 percent of sales. But short sales are a double-edged sword. Yes, they're better for the banks and the sellers because there is less of a financial loss to the bank and less of a credit loss to the seller, but they make comps and appraisals even murkier than they already are.

From the Campbell/IMF report:

“Home values continue to decline, making normal sale homes worth much less than they should be. Appraisers continue to use distressed property sales to establish value on non-distressed listings. Further, these same appraisers will not make any adjustments for amenities, (pools, spas, solar, etc.), when compiling a normal sale vs. distressed comps. I have had at least one appraiser tell me that his firm has been given marching orders to calculate the current value based on all properties sold within the last 3 to 6 months and only use the average square footage minus 10 percent to establish neighborhood value comps. If this is indeed standard practice, it will take a mighty long time to realize any increases in property values,” complained an agent in Arizona.

It's not just in Arizona either.

Builders complain that tight credit, poor appraisals and lack of buyer confidence are still standing in the way of real recovery. Realtors complain the same, and both say home prices have further down to go. Home buyer traffic is still not where it should be right now, in the heat of the Spring market, and that's primarily due to confidence. With gas prices over $4/gallon, and concern over rising interest rates and inflation, big ticket purchases are moving to the back burner.

Another survey out today from First Command Financial Behaviors in Ft. Worth, TX finds a big drop in Q1 in the percentage of middle-class Americans who feel financially secure. The survey of 1000 consumers found more than a third of respondents said they plan to focus on debt payment and 19 percent on savings.

Don't get me wrong, I'm thrilled to see the sales numbers going in the right direction; I just question whether "optimism" is the right word right now. I'm not even sure about "recovery." Tomorrow we get the latest home price report from the folks at S&P/Case Shiller. Let's see how that goes. Oh, and that Reuters piece was all about sales gains on the high and low end of the market. Rich folks with cash and investors with cash.