Existing home sales rose by 2% in May to annualized 4.99 million units, retracing most of the 2.8% drop in March and April combined, according to RBS Greenwich Capital strategist Omair Sharif.
Sales of existing single-family homes bounced by nearly 2% and purchases of condos/co-ops rebounded by about 6%.
Regionally, sales were up in every area except for the South, where they slipped by .5%. In the West, resales rose by 2% to 1.02 million, the highest level since July 2007 and a 100,000 increase since February.
The rise in existing home sales in the West confirms recent observations suggesting that sales in formerly unsubstantial markets are beginning to pick up following sharp declines in home prices, which have made these markets more affordable.
Additionally, foreclosure sales where in some cases homes sell for half the prior value, are said to be boosting demand. Since October, existing home sales have been in a narrow range from 4.89 million to 5.06 million, suggesting that the market could be near a bottom in the resales market.
Meanwhile, the number of existing homes for sale dropped to 4.485 million units in May, down 1.4%, as a 2.6% drop in single-family homes for sale more than offset a 5% increase in the number of condos for sale. The months supply figure stood at 10.8 months in May, down marginally from 11.2 in April but still the second-highest level on record.
Thus, although the resale market is showing some signs of stabilization in demand, there is still an excess of inventory that could take at least another year to work off.