Report: Housing market continues showing improvement

They are up 17 percent year-over-year, and up 31 percent since last year when excluding foreclosures and short sales. 

For the sixth straight month, inventory expanded, which should further fuel sales. Constrained supply has hampered the recovery. 

The combined delinquency and foreclosure rate continued its improvement and is 56 percent back to normal.

The share of mortgages in delinquency or foreclosure dropped to 9.23 percent in July, the second-lowest level in almost five years. 

The recovery has entered its third phase. The first phase started in 2009, when construction and sales started to pick up. The second phase got going in early 2012 as prices began increasing. 

The recovery is in phase three with inventory expanding and mortgage rates rising, which are slowing down price gains. 

Trulia estimates that the fourth phase won't get started until young adults start moving out of their parents’ homes and boosting household formations. That will lead to more construction and new home sales.