The real estate market is the source of many problems for the U.S. economy and things aren't improving much. The U.S. Centus Bureau released new numbers today showing homes sales that inched higher over August's lows, but remained the worst since 1981 in September. Meanwhile, the prices of those houses have hit 2004 levels as sellers continue to accept lower and lower figures to unload their houses.

Home builders have reduced their production to reduce inventory and stabilize prices, but there were still around 394,000 new single family residences on the market at the end of September. At the current pace, it would take just over 10 months to sell through that inventory and turn the economy. The median selling price for a new home fell to $218,400 from $221,900 in August while the mean selling price was up from $263,900 to $275,500.

It is also worth noting that the true price declines are probably even higher than the numbers. Some 65% of homebuilders surveyed by NAHB reported offering customers free upgrades such as marble countertops. Other incentives include paying closing costs and buying down the interest rates. It is also worth noting that the additional sales occurred primarily in the West; the north-eastern US saw a 21.4% drop while the Midwest saw a 5.8% decline.

Unfortunately, the number of unsold new homes, standing at 394,000 at the end of September, remais near historic highs as the number of US home foreclosures added more properties to the market. In the end, these trends will likely take some time to reverse.