Martin Crutsinger
USA Today
WASHINGTON — Sales of existing homes edged up slightly in May, although median home prices continued to fall.
The National Association of Realtors said Thursday that sales of existing single-family homes and condominiums rose 2% to a 4.99 million annual rate 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 prices will have to fall further before the housing industry can mount a sustained recovery.
The median price of an existing home sold in May dropped to $208,600, down 6.3% from a year go. That was the fifth biggest year-over-year price decline in records that go back to 1999. At the median, half of homes sold for more, half sold for less.
The strength in sales reflected gains in all parts of the country except the South, where sales dropped 0.5%. Sales were up 5.5% in the Midwest, 4.6% in the Northeast and 2% in the West.
Paul Bishop, senior economist for the Realtors, said 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 downturn.
Distressed areas now 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 1.4% to 4.49 million units, which represents a 10.8-month supply at the May sales pace, down from an 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 next year.