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Existing Home Sales Rise (Curb Your Enthusiasm)

Existing home sales rising
Existing home sales rising

I was heartened to learn Monday that there is actually a price point at which buyers are willing to get back into today’s housing market -- despite the fact that economists, builders and the CEOs of Fannie Mae and Freddie Mac all say that house prices will continue to fall.

Existing home sales in the West rose nearly 10 percent in July, thanks to a 22 percent drop in prices. Now, granted, the majority of those sales were “distressed” properties, which means foreclosures or short sales. Still, someone was willing to put down at least a small chunk of change to invest in the future of the housing market.

(Is this a bottom? Dean Maki, of Barclays; David Seiders, of the Natl. Association of Homebuilders; and Charlies Calomiris, professor at Columbia, debate in the video at left.)

On the flip side, I was not so heartened to hear that inventories went up. Yes, the bulk of that was driven by new condos, but single-family inventories didn’t exactly go down. And sales are way off in local markets that were not particularly "boomy" during the boom, like Chicago, Atlanta and Indianapolis. Why? The economy, fear of falling prices and today’s impossibly pricey mortgage market.

This is why I don’t think we’ve hit bottom yet. It’s one thing to hail the return of the buyer to markets where it would be just positively silly not to buy a house, i.e., where some prices have fallen nearly 50 percent in some foreclosure-ridden neighborhoods.

But it’s another thing to say that, just because some buyers are willing to get back in the game, all buyers are willing. Until Fannie and Freddie get straightened out and until the foreclosed properties work their way through the system, housing will continue to be a festering thorn in the side of today’s economy.

Questions? Comments? RealtyCheck@cnbc.com