Home Resales Up From Previous Month, as Prices Fall

WASHINGTON -- Existing-home sales rose a second month in a row during May, but prices again fell sharply, threatening a delay to a housing sector recovery.

Home resales increased by 2.4% to a 4.77 million annual rate from 4.66 million in April, the National Association of Realtors said Tuesday. The NAR originally reported April sales rose 2.9% to 4.68 million.

Wall Street expected a 4.80-million sales rate for previously owned homes in May.

Of the 4.77 million homes actually sold in May, about 33% were foreclosures and short sales. While elevated, that figure is lower than the 45%-to-50% range earlier this year.

Distressed property sales have pushed prices lower, year over year. The median price for an existing home last month was $173,000, down 16.8% from $207,900 in May 2008.

"We need to have increased sales to stabilize prices," NAR economist Lawrence Yun said.

Mr. Yun also said poor appraisals are stalling transactions. "There is danger of a delayed housing market recovery and a further rise in foreclosures if the appraisal problems are not quickly corrected," he said.

Low prices and mortgage rates have encouraged buying amid the recession. But rates have climbed. The average 30-year mortgage rate was 4.86% in May, up from 4.81% in April, Freddie Mac data show. Rates have gone up in June and analysts fear rising borrowing costs might restrain demand.

Tighter credit and a quarter-century-high unemployment rate of 9.4% have hurt sales. Realtors hope the $8,000 tax credit for first-time home buyers, inserted in the Obama administration's economic stimulus package, keeps prodding demand.

Previously owned home sales, year over year, were down 3.6% from the pace in May 2008, Tuesday's report said.

Weak demand has kept inventories of unsold homes high. Inventories of previously owned homes fell 3.5% at the end of May to 3.8 million available for sale. That represented a 9.6-month supply at the current sales pace, compared to 10.1 in April. Excess supply is depressing prices.

Regionally, sales in May compared to April rose 3.9% in the Northeast and 9.0% in the Midwest. Sales were flat in the South. The West slid 0.9%.