Home Sales Edge Up, Prices Still Tumbling
Sales of existing homes edged up slightly in May although median home prices continued to fall.
The National Association of Realtors reported that sales of existing single-family homes and condominiums rose by 2 percent to 4.99 million units last month
It was only the second sales increase in the past 10 months, but it was not viewed as a sustained rebound. Many economists believe that prices will have to decline more before the housing industry can mount a sustained recovery.
The median price of an existing home sold in May dropped to $208,600, a fall of 6.3 percent from a year go. That was the fifth biggest year-over-year price decline on records that go back to 1999.
The strength in sales reflected gains in all parts of the country except the South, where sales dropped by 0.5 percent. Sales were up 5.5 percent in the Midwest, 4.6 percent in the Northeast and 2 percent in the West.
Paul Bishop, senior economist for the Realtors, said that for the past few months sales have been rebounding in parts of the country that had been hardest-hit by the housing bust, while sales have weakened in some areas that formerly had been immune from the overall downturn.
Distressed areas that now are seeing sales gains included Sacramento, the San Fernando Valley and Monterey in California; Sarasota, Fla.; and Battle Creek, Mich.
The inventory of unsold homes dropped by 1.4 percent to 4.49 million units, which represents a 10.8-month supply at the May sales pace, down from a 11.2-month supply in April. That's still about double the inventory level that existed during the five-year housing boom.
"Stabilization in home prices can only occur with buyers returning to the market, so we are encouraged by rising home sales, particularly in distressed markets," said Lawrence Yun, the Realtors' chief economist.
However, rising mortgage foreclosures are dumping even more homes onto the already glutted housing market.
Many economists predict sales will keep falling through the summer and prices will not start to rebound until the spring of next year.
