At this point, the housing market just cannot have everything. It has recently registered an increase in home sales but is still fearfully scraping along the bottom, as apparent in subdued prices and the recent scandal on foreclosure fraud.

The National Association of Realtors reported a 10% surge in existing home sales for the month of September. The seasonally-adjusted reading for September may have been 19.1% lower than last year’s 5.6 million sold homes but the total of 4.53 million homes sold for September 2010 is definitely an improvement over the 4.12 million for the month of August. The distressed sales were 35% of the overall home sales for the month.

Median prices, though, did not have the same fate as the home sales. September’s median price tag of $171,700 is 3.3% below August figures. That median price tag is also a 2.4% drop from last year’s price tag.

A lot factors contribute to these events. And one of them is the slow job growth.

“This is the biggest monthly gain in 28 years, even though we should be closer to 5 million [monthly home sales] given the rate of population growth. Buyers are responding to low interest rates, but what hurts is the anemic pace of job growth,” says National Association of Realtors spokesperson Walter Molony.

In February, the gauge in home prices bottomed at $164,600 and slowly increased until June when prices reached $183,000. Since then, prices have continuously fallen. The recent dip may be attributed to the recent talks of foreclosure fraud.

When news of possible robo-signing and backdating of documents haunted the housing market, major mortgage lenders implemented foreclosure delays especially in states where foreclosures needed judicial approval. The delay, coupled with Federal Reserve’s resolve to look intensively at the issue, is feared to greatly affect the home supply and prices.

With a moratorium on foreclosure freezing, homes that should already be sold in the market are held back. This would lead to a temporary raise in home prices – which is not necessarily good, as there will eventually be a flood of cheaper homes and depressed prices once the moratorium is lifted.

Though home supply is still a little bloated – 8.9% higher than last year’s number – the number has been decreasing on a monthly basis. Home inventory for the month is 1.9% lower than last month’s at 40.4 million homes – that’s a 10.7-month supply.