Existing home sales rebounded strongly in September following an August decline, according to the National Association of Realtors. That's not the only good news when it comes to an improving home market, and a separate report shows the overall economy isn't as bad as you may think.

Existing Home Sales

Total existing home sales, which include single family homes, townhomes, condominiums and co–ops, increased 4.7% to a seasonally adjusted annual rate of 5.55 million in September. That compares to a slightly downwardly revised 5.30 million in August, and is 8.8% above a year ago.

All four major regions experienced sales gains in September.

Lawrence Yun, NAR chief economist, says a slight moderation in home prices in some markets and mortgage rates remaining below 4% gave more households the confidence to close on a home last month.

"September home sales bounced back solidly after slowing in August and are now at their second highest pace since February 2007," he said. "While current price growth around 6% is still roughly double the pace of wages, affordability has slightly improved since the spring and is helping to keep demand at a strong and sustained pace."

Single–family home sales, the lion’s share of the market, rose 5.3% to a seasonally adjusted annual rate of 4.93 million in September from 4.68 million in August, and are now 9.6% above the 4.5 million pace a year ago.

This Thursday report follows one from the U.S. Commerce Department report earlier in the week showing nationwide housing starts increased 6.5% to a seasonally adjusted annual rate of 1.206 million units in September from an upwardly revised August reading -- the second highest rate in eight years.

Multifamily starts rose 18.3% to a seasonally adjusted annual rate of 466,000 units while single-family production edged up 0.3% to 740,000 units.

The number of new housing permits issued, on the other hand, fell more than expected, down 5% in September. Additionally, the gain in August was reduced from a 3.5% to a 2.7% increase.

The larger-than -expected decline in permits suggests the anticipation of further momentum in the U.S. housing market may fall short of expectations with a slower pace of activity coming down the pipeline, according to Lindsey Piegza, chief economist at Stifel Fixed Income.

“Multi-family construction remains the name of the game, with the majority of new projects focused on rental, condo, and co-op units, a reflection of both a change in preferences, as well as a declining ability to afford a home with stagnant wages,” she said. “With the expectation of a near-term rate increase, borrowing costs are anticipated to begin a gradual ascent, making financing a home purchase more difficult for many Americans, thus fueling an appetite for smaller purchase or alternative rental options.”

Leading Economic Indicators Better Than They First Seem

A separate report released Thursday could be interpreted as showing some possible trouble ahead for the U.S. economy, but there is nothing to worry about, according to the private research group The Conference Board.

Its Leading Economic Index declined 0.2% in September to 23.3 after no changes were reported for August and July. This index gauges economic conditions three to six months ahead.

“Despite September’s decline, the U.S. LEI still suggests economic expansion will continue, although at a moderate pace,” said Ataman Ozyildirim, director of business cycles and growth research at The Conference Board. “The recent weakness in stock markets, the manufacturing sector and housing permits was offset by gains in financial indicators, and to a lesser extent improvements in consumer expectations and initial claims for unemployment insurance.

According to the group, the U.S. economy is on track for moderate growth of about 2.5% in the coming quarters, despite the mixed global economic landscape, as evidenced by two other readings.

The Conference Board Coincident Economic Index, which measures current economic activity, increased 0.2% in September following a 0.1% increase in August, and a 0.3% increase in July.

The Lagging Economic Index, which measures U.S. economic activity of previous months, increased 0.5% in September following a 0.1% increase in August and a 0.4% increase in July.