I think the key is "existing homes".
People are still entering the home market, but they are no longer able to afford to build. Land prices are really cheap, but construction costs are still high.
People have been used to buying a new home, which have been springing up like mushrooms, or planning to build a custom home. With building costs so high, and homes in foreclosure going cheap, more first-home buyers are willing to settle for an existing home.
And yes, speculators are snapping up houses too.