Existing home sales pop in August

We just got existing home sales figures for August, and they were definitely better than expected. Sales rose 7.7% on the month to 5.03 million at a seasonally adjusted annual rate. That was the highest in five months and above the average forecast of 4.75 million. Single-family sales gained 8.5% while condo and coop sales rose 1.8%.

There was broad-based regional strength, with sales up 2.7% in the Northeast, 3.8% in the Midwest, 5.4% in the South, and 18.3% in the West. The number of homes for sale dipped 3%, while the months supply at current sales pace indicator of supply fell to 8.5 from 9.5. The median price of a home fell to $168,300 from $171,200 in July. That was also down 5.1% from a year earlier.

Sales of existing homes topped expectations in August, with widespread regional strength and a nice decline in inventory. That's the good news. The bad news is that these are lagging figures -- they reflect contracts signed a month or two prior. Other leading indicators of housing demand, including builder optimism and mortgage activity, point to future weakness. In fact, home purchase loan demand just fell to the lowest level since February.

Long story short? Housing isn't falling off a cliff. But it's not recovering either. That lack of a recovery, in turn, is impeding the broad economy's emergence from the Great Recession.