Existing Home Sales Rise By 2% In May On Price Drop

New York, NY (AHN) - Sales of existing home increased as the prices dropped slightly more than expected in the month of May, according to a report released on Thursday.

The National Association of Realtors reported Thursday resales of homes and condos increased by 2 percent to a seasonally adjusted annualized rate of 4.99 million in May.

The lates resales rise is the highest sales pace since February and it is still more than unrevised 4.89 million annual pace reported in the month of April.

The median home price was $208,600 in the month of May, down 6.3 percent from $222,700 in May 2007; While the median price in April this year was reported to be at $201,200.

The report showed that the sales remained 16 percent below the the 5.93 million-unit pace in May 2007.

"Home buyers are starting to get off the fence and into the market, drawn by drops in home prices in many areas and armed with greater access to affordable mortgages," NAR President Richard Gaylord, a broker with RE/MAX Real Estate Specialists, said in a statement.

One of the factors influencing the upward momentum of the sales of existing homes is due to the declining rates, which were slashed over high inventories.

But the report suggested that the potential buyers of the properties are still waiting for the prices to fall further down.

"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.

The lenders have also tightened their standards on home loans as the credit market losses crossed more than $350 billion last month caused by the subprime contagion in summer 2007.

Inventories of unsold homes on the market declined by 1.4 percent to 4.49 million; the inventory data is not seasonally adjusted. Inventories are up 2.4 percent over the past 12 months.

The report showed that inventories of unsold homes represented a 10.8-month supply at the current sales pace, while by the end of April there was an 11.2-month supply.