The National Association of Realtors Friday morning announced the first year-over-year sales gain in the existing home market since November, 2005.

Sales of existing homes of all types were up 5.5% nationally for the month to a seasonally adjusted annual rate of 5.18 million units, up 1.4% from the same month last year. Single-family home sales were up 6.2% to a SAAR of4.62 million, 3.8% above the pace last September.

The gains were driven largely by a 16.8% jump in the West region. The Midwest was up 4.4% and the South 2.2%. The Northeast was down 1.2%.

Prices continued to fall in September, with the median price for all housing types down 9% to $191,600 and for single-family homes down 8.6% to $190,600.

Condominium and co-op sales were flat with August at a rate of 560,000 units, 15.7% below September 2007. The median existing condo price was $199,400, down 10.2% from a year ago.

The Realtor group said 35% to 40% of sale volume was comprised of foreclosed or distressed properties and that 80% of buyers during the month were people who intended to live in the homes they bought, not investors.

"The sales turnaround which began in California several months ago is broadening now to Colorado, Kansas, Minnesota, Missouri and Rhode Island," said NAR chief economist Lawrence Yun. The numbers might have been even higher, he indicated, because "the South was hampered by much lower home sales in Houston in the aftermath of Hurricane Ike."

Total housing inventory at the end of September fell 1.6% to 4.27 million existing homes available for sale, a 9.9-month supply at the current sales pace and down from a 10.6-month supply in August. September was the second consecutive month of decline since inventories peaked in July.

Yun said foreclosures and short sales were "pulling the median price down because many are being sold at discounted prices." He also stated that "the current market is not being dominated by speculative investors," citing the NAR's analysis that 80% of current buyers are purchasing a primary residence, slightly higher than historic norms.

Regionally, the West jumped 16.8% to an annual rate of 1.25 million in September, 34.4% above September 2007, with the median price down 18.5% from last year to $253,600 this year. The Midwest was up 4.4% to a rate of 1.19 million, 2.5% below a year ago, with the median price down 7.9% $152,500.The South rose 2.2% to a pace of 1.90 million, 7.8% below September 2007.The median price in the South was $167,200, down 4.1% from a year ago.In the Northeast, existing-home sales slipped 1.2% to an annual pace of 840,000, and are 7.7% under last September, with the media price down 5.4% to $246,800.

Yun said the market is not out of the woods yet, however. "The credit markets are not settled yet, although the mortgage market stabilized with the government takeover of Fannie Mae and Freddie Mac. Inventory remains high, and price declines are pressuring owners," he said. Echoing building trade groups, he said, "Additional housing stimulus would stabilize prices more quickly, which in turn would bring faster stability to Wall Street. Removing the repayment feature on the first-time buyer tax credit and permanently raising loan limits would bring more buyers into the market and further reduce inventory."

Josh Levin, home building analyst at Citi North America, put out a research note under the headline "Good News But Old News." He pointed up the good: "While we think some of these metrics were favorable, we note that: (1) foreclosure sales are necessary but not sufficient for a housing market recovery; (2) the inventory of homes for sale tends to peak midyear before declining in the autumn and fall; and (3) they are not indicative of activity in the new home market." But he also noted the bad: "This resale activity does notfully reflect the impact of the credit crisis (tighter credit, rising unemployment,etc). In the larger macro context, and based on what we have heard from bothpublic and private homebuilders about traffic in October, we think the near-termoutlook for the housing market remains poor."

Likewise, Stephen East at Pali Research put out a note stating, "Obviously this positive surprise we'll take given rather dismal times, but remind investors that this data reflects contracts signed (likely in June and July) well before the credit crisis came to a boil. We would expect results to yet again weaken as we progress through Fall."