NEW YORK CITY—The economic news for August appeared to contain dismal news for the housing market with existing home sales down 5.3% from a year ago and down 1.8% from July, but the opposite is the case. August’s numbers demonstrate that the housing market is improving and that the low hanging fruit (i.e. below market units) is gone and that investors are leaving the housing market because the ability to turn a quick profit had ended. The foregoing premise is supported by the fact that the sale of distressed homes declined for the second straight month and, for the first time since October, 2008, is in single digits.          

Economists caution that you cannot tell that the economy is in a recession until there has been negative growth for two quarters, the confirmation of which sometimes takes another two quarters to confirm because the estimates of various numbers need to be adjusted. Conversely, it can take years to know that a recession has ended and this is particularly true of real estate recessions. In fact, there has been incredible growth in Boston, New York, Washington and Miami for several years, while the housing market elsewhere has continued to be moribund. However, a great deal of the soft market around the country has been caused by two factors: a glacially slow recovery and a huge supply of available houses and apartments that included homes that were being foreclosed and subject to short sales. These factors have prevented the recovery from being felt by the average homeowner, which further eroded the confidence needed to purchase a new home.

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