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What Do August Home Sales Numbers Really Mean?

Now that we have new and existing home sales in, I want to point out a couple of facts that got lost in all the paperwork:

1. New construction makes up 6.7 percent of total homes for sale. Existing, therefore, makes up 93.3 percent.

2. Inventories continue to come down for both new and existing, and there's your bright spot.

3. Inventories of existing homes vary drastically by price point and by region. (The following is July data, but it's still valid.)

For homes costing $100-250K, there is a 7.4 month supply in the Northeast and a 3 month supply in the West.

For homes costing $500-750K, there is a 15 month supply in the Northeast and a 6 month supply in the West.

4. Why do I care about area inventories at different price points? Because real estate, and its recovery, are local. The West has been driving the sales numbers for the past six months, and the low end of the market is all that's moving. With supplies so low out West, especially on the low end, that means two things: First, overall national sales numbers will fall (as we saw in the August existing home sales report) and secondly, prices may begin to rebound first out West as bottom feeders have less to choose from and are forced to bid up.

5. Foreclosures could negate everything I just said.

Questions? Comments? RealtyCheck@cnbc.com