While existing home sales reported by the National Association of Realtors rose by 2% to 7.29 million units annualized -- the second highest to June's all-time record and the fifth straight reading above the seven million mark -- the Commerce Department reported a 9.9% drop in new home sales.

RBS Greenwich Capital Chief Economist Stephen Stanley  said that based on existing home sales figures, recent reports of the housing sector's demise have been greatly exaggerated. The uptick in existing home "inventory" implies that homeowners are still willing to test the waters. At the margin, this should help stem rising home prices going forward, Stanley added. Meanwhile, new home sales for August came in much weaker than expected, dropping to a seasonally adjusted annual rate 1.24 million units. RBS Greenwich analysts said that the "speculative" edge of homebuilding is coming off, as the largest drop in new home sales, 17.9%, was in the Western region, although this remains the eleventh highest monthly print on record.

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