The National Association of Realtors said that existing home sales bounced back to 5 million units annualized in July, a retraction from the entire June dip, which looks to have been more noise than substance.

Resales are still strongest in the West, which had its fifth straight monthly rise, increasing by 9.5% in July versus June and by a cumulative 22% since January/February.

According to analysts from RBS Greenwich Capital, this works along with many anecdotal reports that sales of foreclosed properties have become increasingly commonplace in California and other hot spots in that region. This means more deals at lower prices. Although the median sales price, a series analysts usually do not put much stock in to gauge home price trends because it does not control for the mix of homes sold, has risen by 2.9% for the nation as a whole since the turn of the year, the median price in the West has dropped by 12 1/2%.

Generally, the July existing home sales data confirm RBSGC's view that home sales began to form a bottom in 1Q08. Resales averaged 4.93 million in the first half of the year, similarly to the December reading of 4.91 million. Analysts expect home sales to drag along the bottom as tight credit and a weak economy are pitted against falling prices that make homes on the market look more attractive and affordable to prospective buyers.

Home sales should be about flat for the remainder of the year, but only if prices keep dropping to drag more buyers into the fray. The new home sales data to be released tomorrow will show a somewhat weaker picture, as builders have had difficulty keeping pace with the price declines brought on by foreclosure-related selling, RBSGC said.

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