Existing home sales gained traction in July, moving up 2.3 percent to 4.47 million units annualized, to partially reverse a 5.4-percent decline in June. The monthly existing home sales trend has been choppy for most of 2012, but going back to July 2011, the trend is mostly higher.

harrisburg pa real estatePrice concessions appeared to be occurring in more existing home markets (or perhaps fewer markets experienced sharper concessions) in July; the national median price for an existing home declined 0.8 percent to $187,300. When viewed from a longer-term perspective, though, the median price looks encouraging – up 9.4 percent year over year.

Supply is one frequently mentioned factor for the choppy sales trend. Supply relative to the current sales rate is at 6.4 months, down from 6.5 months in June and 9.3 months in July 2011. Inventory levels remain far below the peak set in 2004. That's good news for prices, but maybe not so good news for sustaining an upward sales trajectory.

New home sales, on the other hand, continually make gains. July sales increased 3.6 percent to an annualized rate of 372,000 units, which beat the consensus estimate by 2,000 units. If we go back to June 2011, the trend in new home sales has been mostly up, and mostly unbroken.

As with existing home sales, new-home sales experienced a few more price concessions, though mostly in the lower-priced sectors. The national median price dropped 2.1 percent, to $224,200, for July. The dearth of inventory should keep future discounting in check. Inventory is a mere 4.6 months at the current sales pace, a 31-percent decline over the 6.7 months in July 2011.

The positive trends in pricing and sales are welcomed news, to be sure. But that doesn't mean everyone is content. Sluggish job growth continues to weigh on the economy, while articles on shadow inventory continue to capture headlines.

We are more sanguine than most on the housing recovery. The Wall Street Journal appears to share our sentiment. A recent WJS article reiterated a number of the more salient points we've been hitting on for the past year: namely that shadow inventory is a well-vetted issue, many of the homes in the inventory will never hit market because they are uninhabitable, many of the homes have been converted to rentals, and many of them have been disposed through orderly short sales.

The most important takeaway is that shadow inventory is well vetted. It's never the known issues that sink a recovery, it's always the unknown issues – those lurking in the shadows. That said, shadow inventory has long ceased to lurk in the shadows, which is why it really is no longer shadow inventory.

Courtesy of Jessica Regan.

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