The most recent existing-home sales report indicated that housing may have turned a corner, but structural issues persist.

Covering the housing market nowadays is a strange experience. On one hand, you have the clear monthly reports from NAR, CoreLogic and other institutions that clearly show that the housing market has made substantial progress in the last couple of years.

Yet, on the other hand, you have the longer term issues, the structural inconsistencies that continue to hold housing back from a true recovery – and the most recent existing-home sales report from NAR was perhaps the most glaring case of those issues.

A Tale of Two Housing Markets

First of all, we should be clear that there were many good things in NAR’s existing-home sales report. Sales were up month-to-month, distressed sales are still down and inventory rocketed way up.

The problem comes up when you look at the composition of those sales, and how they performed at various price points. First, consider this graph, courtesy of data from HousingWire:

See what’s happening? Though home sales in the upper price brackets saw steady year-over-year increases, the lower price brackets saw sales fall by a marked amount, while the mid-range price levels saw negligible growth.

Why is that a problem? As this second chart shows, those lower-priced brackets make up a disproportionate share of the existing-home sales market:

So in other words, as we reported last fall, the majority of the existing-home sales market is seeing declines, while the relatively small upper price brackets are doing just fine.