What are we to make of two new reports, one saying existing home sales were up again in June, the other saying foreclosure filings are continuing to pour in?

The National Association of Realtors reported today that sales of existing homes rose 3.6 percent to a seasonally adjusted annual rate of 4.89 million in June, up from 4.72 million in May. Sales were off only 0.2 percent from the June 2008 figures. Housing inventory fell 0.7 percent so that now there is a 9.4-month supply of homes on the market. The national median home price rose from May’s $173,000, to $181,800 in June, but the most recent price is still down 15.4 percent from last year.

And as Jon C. Ogg writes on the 24/7 Wall St blog

When you see the drop in prices, it is hard to get excited in general.  But there is hope as the level of distressed selling is getting to manageable levels.

Now we just have to hope that the shadow supply of houses that will come on the market or that have been foreclosed by banks that are not yet on the market (or being held off the market) is not as high as many fear.  There is also the notion to contend with that the gains are off of levels so low with such low prices that this good news just represents a scolding rather than a lashing.

The Wall Street Journal reported that according to foreclosure data tracker RealtyTrac, foreclosure filings rose again in June to 336,000. During the first half of this year there was one foreclosure filing for every 84 homes in the nation. Some estimates put the total number of foreclosures for this year as high as 3.0 million. Once all these homes get put out on the market, prices are sure to fall more as banks offer deep discounts on these unwanted properties.

The median price of home sales in 20 of the nation’s major cities fell by an average of 0.6 percent in April, according to Standard & Poor’s Case-Shiller index, showing great improvement over March when they slid by 2.2 percent. Yet plenty of people are not so sure this is a sign of economic recovery on the whole.

As Steve Blitz writes on his economic markets blog:

“Recession definitely impacts home prices… But in each cycle, home prices recover before the economy does… Because the perception of recovery lags reality, this means that home prices begin to recover long before consumers believe the recession has ended and certainly before the unemployment rate starts to turn down… My forecast is for home prices to begin [to] move higher in the third quarter and to finish 2009 with prices about 11% below year-end 2008 levels.”

And home prices did start to rise in several of the tracked metro areas. Dallas, Denver, and Cleveland all experienced price gains of 1 percent or more from March.

But even S&P chairman David Blitzer is cautious about announcing this as a good sign.

“While one month’s data cannot determine if a turnaround has begun; it seems that some stabilization may be appearing in some of the regions. We are entering the seasonally strong period in the housing market, so it will take some time to determine if a recovery is really here,” he said.

Blitzer attributed the slowing of price declines to a rise in consumer confidence and rallies in the stock market.  So what’s it all mean? Now may be the best time to get off the fence and buy a home before prices continue to rise. Then again, these number can easily fluctuate based on unemployment and other factors, so maybe you can wait until you actually start seeing price gains in a majority of the metro areas.

The number of U.S. home mortgages that are delinquent or in foreclosure has climbed to a record high of 11 percent, according to a report Thursday from the Mortgage Bankers Association.

The MBA’s National Delinquency Report found that delinquencies alone, measured by borrowers behing at least one month behind in their mortgage payments, increased by 8 percent in the last quarter of 2008.

“Subprime ARM loans and prime ARM loans, which include Alt-A and pay-option ARMs, continue to dominate the delinquency numbers,” Jay Brinkmann, chief economist for the MBA, said in a prepared statement. “Nationwide, 48% of subprime ARMs were at least one payment past due, and in Florida over 60% of subprime ARMs were at least one payment past due.”

While the current numbers represent record highs in the 36-year history of the MBA survey, they may not paint a complete picture of today’s housing market. The percentage of Americans who are homeowners grew dramatically during the recent housing boom when financing was cheap and readily available. Many entered the ranks of homeowning, who were obviously not financially able to take on that responsibility, as evidenced by all the sub-prime, or poor credit loans that were in initiated in the last five years and that are now in delinquency or foreclosure.

When the unsustainable housing bubble burst, those who were never truly able to afford the homes they  bought defaulted on their loans, a glut of foreclosed homes entered the market, investors got nervous, the stock market plummeted and the general economy hit the breaks, leading to job loss and foreclosure among even those traditional, good credit borrowers who entered the housing market with proper precautions. 

Many see this latest report as a further call to action for Washington politicians, but based on the circumstances of the situation, it is questionable whether saving homeowners from foreclosure will truly correct the housing market and the economy. An unsustainable situation has begun the natural process of rebalancing itself. And while some on Capitol Hill are horrified at the possibility, true equilibrium for the housing market may mean that many American homeowners may have to give up that title until they are actually able to afford it on their own.

Home prices will continue to sink another 11 percent in the coming months, resulting in a 36 percent overall decrease in home values, according to report released Monday from Moody’s Economy.com, but the silver lining is that they will bottom out by the end of the year.

“Notwithstanding the intensifying economic gloom, the bottom of the housing downturn is within sight,” chief economist Mark Zandi said in a statement today. “Presuming we see strong action by policymakers to help support the economy and the housing market, prices will begin to recover by the end of this year.”

To date, the 381 metropolitan areas included in the Case-Shiller home price index have experienced a 25 percent decrease on average in home values. Before the end of 2009, Moody’s predicts that 62 percent of those areas will see double-digit declines before the correction is through.

The house prices in Southeast Florida is likely to be hit hardest during the coming year with values in Naples, Florida forecasted to fall 70.1 percent from 2005 to the last quarter of 2010. Moody’s predicts that the next biggest losses with be in Merced, California where prices will probably drop 69.6 percent.

Moody’s predictions are all based on assumptions that the U.S. government will aggressively legislate ways to stimulate the economy. “Policymakers have not yet been able to break the downward spiral that has developed among the sinking housing market, job losses, frozen credit markets, and rising foreclosures,” Zandi said.

Yet, even if the newest bailout package comes together and consumers profit from an expansion of the first-time home buyer tax credit, Moody’s warns that the housing market recovery after 2009 will not not bring growth back to its pre-downturn rate until the end of 2010.

Restoring the strength of the U.S. housing market is at the top of President Barack Obama’s priorities as it is for many members of Congress these days.

In his weekend address, President Obama revealed the possibility of a revised and expanded bailout program for the financial sector. “Soon my Treasury [Department] secretary, Tim Geithner, will announce a new strategy for reviving our financial system that gets credit flowing to businesses and families,” he said in remarks.“We’ll help lower mortgage costs and extend loans to small businesses so they can create jobs. We’ll ensure that CEOs are not draining funds that should be advancing our recovery. And we will insist on unprecedented transparency, rigorous oversight, and clear accountability — so taxpayers know how their money is being spent and whether it is achieving results.”

The House of Representatives passed its own version of a bailout/stimulus package last week that includes tax cuts and new government programs. The President asked the Senate in his weekend speech to quickly pass the House’s bill, called the American Recovery and Reinvestment Act of 2009, in order to speed up the return of economic stability.

Some in the Senate from both parties are pushing, however, for several amendments to the bill before it is passed. Republican Senator Mitch McConnel from Kentucky, for example, wants to see a provision that would make mortgage loans available to good credit home buyers at a 4 percent interest rate, with the government possibly making up the difference between the lower rate and the market rate.

Democrat and Republican senators have called for an extension of the first-time home buyer credit to include all primary residence purchases as well as stretching out the credit amount from $7,500 to $15,000. And Senator Christopher Dodd, D-Conn., would like to the bill to include a90-day moratorium on all foreclosures nationwide.

President Obama was cautious in his hopes for the immediate success of the stimulus bill, however, saying that the “economic recovery will take years — not months.”

“No one bill, no matter how comprehensive, can cure what ails our economy,” he said. “So just as we jump-start job creation, we must also ensure that markets are stable, credit is flowing, and families can stay in their homes.”

Federal Reserve efforts helped long-term mortgage interest rates drop to their lowest point on record, for the fourth straight week, according to mortgage giant Freddie Mace Thursday.

“Interest rates for 30-year fixed-rate mortgages fell for the tenth week to a fourth consecutive record low due in part to the Federal Reserve’s recent purchases of mortgage-backed securities issued by Freddie Mac, Fannie Mae and Ginnie Mae,” said Frank Nothaft, Freddie Mac vice president and chief economist. “On November 25, 2008, the Federal Reserve announced that it planned to purchase up to $500 billion of these securities by the end of June of this year. For the sake of comparison, there were roughly $4.7 trillion of such securities backed by home mortgages available as of September 30, 2008.”

“Since the end of October 2008,” Nothaft added, “these rates have declined by almost 1 1/2 percentage points, or payment savings of about $184 a month for a $200,000 loan – an additional $11 dollars from last week.”

The average rate on a 30-year fixed rate home loan fell to 5.01 percent, excluding fees, during the week ending January 8, 2009, down from 5.10 percent the previous week. The 30-year loan rate has never been lower during the entire 38-year history of the Freddie Mac weekly survey. Last year at this time, the average rate was 5.87 percent.

Rates on 15-year fixed rate mortgages averaged 4.62 percent, a decrease from 4.83 percent the week before. One year earlier, the average 15-year FRM rate was more than three-fourths of a point higher at 5.43 percent.

One-year adjustable rate mortgages carried an average rate of 4.95 percent, an increase from 4.85 one week previous. A year ago, the one-year ARM average rate was 5.37 percent.