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On a down day for the market, housing rises

NEW YORK (AP) -- It's a good day for housing stocks, even on a bad day for the stock market.

Shares of Toll Brothers, Lennar Corp., KB Home and other builders were all up at least 4 percent in morning trading.

Surprisingly strong earnings from Toll Brothers kicked off a buying frenzy in the housing sector, and a report on sales from the National Association of Realtors added to the rush. The trade group reported higher sales, and higher prices, for existing homes in July. Sales rose 10.4 percent from a year ago, to an adjusted annual rate of 4.47 million units from 4.05 million. And that's especially notable compared to 2010, when July sales were at an annual rate of 3.83 million.

The NAR credited low mortgage rates as well as rising rents, both factors that could encourage renters to become home buyers.

Still, any good news in housing is overhung with concerns that it's not fast enough. The housing market has struggled for years and might never return to the skyrocketing prices and quick sales that buyers and sellers got used to before the financial crisis.

The median home price rose to $187,300, which the NAR says is up 9.4 percent from a year ago. But it's only a slight increase from two years ago, when the NAR reported that the median price for existing homes in July was $182,600.

And Wednesday's results are still far below the pre-crisis days. In 2007, the NAR reported that existing home sales were at an annualized rate of 5.76 million in July, and the median price was $228,600.

The government, consumer groups and others are still struggling with how to keep borrowers in their homes, particularly those whose homes have lost so much value that the mortgages cost more than the house is worth. Interest rates on mortgages are already at record lows. Twenty-four percent of the July home sales were foreclosures or short sales,

There are also concerns that lower-income or first-time home buyers are being shut out of the market. In its news release, the NAR said that investors are scooping up lower-priced houses. The investors can often offer to buy those houses up front, rather than taking out a mortgage, which means they can often beat out a family who might want the same house. First-time home buyers made up 34 percent of purchases in July. Under "normal conditions," the NAR says, that number would be more like 40 percent.

Toll Brothers, which boosted housing stocks when it reported a 46 percent increase in quarterly earnings, is insulated from many of the problems affecting the broader housing market. It targets wealthier families, with incomes of more than $100,000 a year. Those borrowers are also more likely to be able to get mortgages from banks, which are being careful about who they lend to. In its news release, the NAR said the housing market was being "constrained by unnecessarily tight lending standards."

Toll Brothers rose $1.57 to $33.38 in morning trading, nearly 5 percent. Beazer Homes, D.R. Horton, KB Home, Lennar Corp., PulteGroup and Ryland Group were all up at least 4 percent.