CNBC's Diana Olick breaks down the numbers on last month's home sales, and discusses whether a housing recovery is underway, with Patrick Newport, IHS Global Insight, and David Crowe, National Association of Homebuilders.

Home resales rose at the fastest pace in two years last month and housing prices climbed in hopeful signs that the housing market recovery is gaining traction.

The National Association of Realtors said on Wednesday that existing home sales increased 7.8 percent last month to an annual rate of 4.82 million units last month.

That was the fastest annual rate since May 2010 and well above analysts' expectations of a 4.55 million-unit rate.

Nationwide, the median price for a home resale rose to $187,400 in August, up 9.5 percent from a year earlier as fewer people sold their homes under distressed conditions.

The nation's inventory of homes - those for sale on the market - rose 2.9 percent during the month to 2.47 million.

"The housing market recovery is becoming much more convincing," said NAR chief economist Lawrence Yun.

The price increase is measured against August 2011, and since then distressed sales have fallen to 22 percent of total sales from 31 percent. Distressed sales also fell in August of this year compared to the prior month.

While the broader U.S. economy appears to be losing steam, housing has gained traction and has become a relative bright spot.

Still, the recovery is from a depressed level. Sales of previously occupied homes remain below the more than 5.5 million that economists consider consistent with a healthy market. And the number of first-time homebuyers, who are critical to a housing rebound, slipped to 31 percent from 34 percent.

Yun said favorable buying conditions get the credit.

Housing starts rise less than expected

“The housing market is steadily recovering with consistent increases in both home sales and median prices. More buyers are taking advantage of excellent housing affordability conditions,” he said. “Inventories in many parts of the country are broadly balanced, favoring neither sellers nor buyers. However, the West and Florida markets are experiencing inventory shortages, which are placing pressure on prices.”

According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage rose to 3.60 percent in August from a record low 3.55 percent in July; the rate was 4.27 percent in August 2011.

“The strengthening housing market is occurring even with difficult mortgage qualifying conditions, which is testament to the sizable stored-up housing demand that accumulated in the past five years,” Yun added.

Regionally, existing-home sales in the Northeast rose 8.6 percent to an annual pace of 630,000 in August and are also 8.6 percent above August 2011. The median price in the Northeast was $245,200, up 0.6 percent from a year ago.

Existing-home sales in the Midwest increased 7.7 percent in August to a level of 1.12 million and are 17.9 percent higher than a year ago. The median price in the Midwest was $152,400, up 7.8 percent from August 2011.

In the South, existing-home sales rose 7.3 percent to an annual pace of 1.90 million in August and are 11.1 percent above August 2011. The median price in the region was $160,100, up 6.5 percent from a year ago.

Existing-home sales in the West increased 8.3 percent to an annual level of 1.17 million in August but are unchanged from a year ago. With ongoing inventory shortages, the median price in the West was $242,000, which is 16.3 percent higher than August 2011.

The Associated Press and Reuters contributed to this report.

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