The National Association of Realtors reported sales rose to a seasonally adjusted annual rate of 5 million units. Sales had been expected to rise by only 1.6 percent, according to economists surveyed by Thomson/IFR.
Still, home sales were 13.2 percent lower than a year ago.
The median price for a home sold in July dropped to $212,000, down by 7.1 percent from a year ago.
The inventory of homes for sale rose to a record 4.67 million homes or a 11.2 months' supply at the current sales pace, matching a record set in April.
Let's think about these numbers.
Sales increased month to month, but decreased from last year. That means we're still on a downward trajectory in the longer-term.
Prices dropped 7.1%. In the long run this is good because houses are way too expensive right now. That's what happens in a price bubble -- prices move higher than they should, so they have farther to fall on the downside.
The record inventory is the really scary number. Prices are dropping yet inventory is increasing. That means we're nowhere near equilibrium price.