Great Article from USA Today:

Sales of existing homes rebounded slightly in August after a record drop the month before, an indication that the worst may be over even though the housing recovery still is on shaky ground.

Existing home sales climbed 7.6% to an annual rate of 4.13 million units, according to a report Thursday by the National Association of Realtors (NAR). But the pace is still weak, 19% below the 5.10 million-unit pace in August 2009.

Sales had plummeted 27.2% in July to the lowest level in 15 years a seasonally adjusted annual rate of 3.84 million units. The drop is largely attributed to a decline in home purchases following the expiration of a federal home-buyer tax credit of up to $8,000.

Looking ahead, economists say Augusts' increase in existing home sales may be a sign that home sales will slowly pick up over the next year.

"This report is only good in the context of the incredibly bad report last month," say Mark Zandi, with Moody's Analytics. "But last month will be the low point in the cycle. When we look back years from now, it will be the bottom. The worst is over."

Zandi says the bottom of the crash hit in July, but that the market will not come roaring back. Still, sales should be better a year from now.

Home prices also inched up. The national median existing-home price for all housing types was $178,600 in August, up 0.8% from a year ago. Distressed homes, which includes foreclosed properties, rose to 34% of sales in August from 32% in July; they were 31% in August 2009.

Total housing inventory at the end of August also slipped 0.6% to 3.98 million existing homes available for sale, which represents an 11.6-month supply at the current sales pace, down from a 12.5-month supply in July.

Home sales may rise as the job market improves. Patrick Newport, an economist with IHS Global Insight, says he is not expecting existing home sales to climb above the 6 million mark — a number one might expect under normal conditions — until 2013. Mortgage applications remain stagnant despite low prices and attractive interest rates.

On Thursday, mortgage buyer Freddie Mac said the average rate on a 30-year fixed mortgage was unchanged at 4.37%. Earlier this month, the rate dipped to 4.32%, which was the lowest level on records dating back to 1971.

Since the tax credit expired, there have been fewer purchases by first-time home buyers: first-time buyers purchased 31% of homes in August, down from 38% in July, according to a separate NAR survey.

Regionally, the West led with the biggest rise in existing home sales: August saw a 13.8% jump to an annual pace of 990,000 units, but that's still 16.1% below August 2009.

The Northeast followed with a 7.9% rise in sales in August, but that's still 24.4% below August of last year. The South saw sales rise 5.2% to 1.62 million units on an annual level, which is 13.4% below August 2009.

And sales inched up 5% in the Midwest to a pace of 840,000, 26.3% below a year ago. Both the South and Midwest also saw a rise in median home prices from a year ago.

Contributing: Associated Press