The nation’s fledgling housing recovery, if you can call it that, has bumbled along in fits and starts, each step forward usually followed by a step backward, each piece of good news littered with caveats.
Case in point: Thursday’s report detailing sales of existing homes during May, which offered yet another snapshot of a housing market that appears to be bottoming out but remains miles from recovery. Like so much other data in recent months, it included a mixture of encouraging and troubling news.
The figures, released by the National Association of Realtors, show that total sales of existing homes fell last month by 1.5 percent, to a seasonally adjusted annual rate of 4.55 million. Despite that drop, the rate of sales remained nearly 10 percent higher than a year ago.
NAR officials attributed the decrease in sales largely to inventory shortages in numerous markets throughout the country, rather than decreasing demand from buyers.
“Even with the monthly decline, home sales have moved markedly higher with 11 consecutive months of gains over the same month a year ago,” said NAR chief economist Lawrence Yun.
Also in the mixed-news department, the median sales price for all housing types in May rose to $182,600, marking the third consecutive month of year-over-year price increases. But those gains came largely because of a drop in the sales of lower-priced homes.
Distressed homes — such as foreclosures and short sales, which typically sell at steep discounts — accounted for 25 percent of sales in May, down from 28 percent in April and 31 percent a year ago.
First-time buyers accounted for 34 percent of purchasers in May, down slightly from April. Investors, who tend to buy in bulk and with cash, accounted for 17 percent of buyers in May, down from 20 percent in April.
The number of sales in May fell in every region of the country except for the Midwest, where they increased slightly over the previous month. Sales fell most sharply in the Northeast.
Also Thursday, government-backed mortgage giant Freddie Mac reported that the average interest rate on a 30-year fixed mortgage had dropped to an astoundingly low 3.66 percent. The average rate on a 15-year mortgage also fell to 2.95 percent.
Such historically low interest rates have helped entice new home buyers and have compelled many existing homeowners to refinance their mortgages. But because of tight lending standards that have persisted since the housing bust and down payment requirements that many would-be borrowers simply can’t meet, the low interest rates have been anything but a panacea.
Meanwhile, more than 2 million homes across the country remain in some stage of foreclosure, and numerous borrowers continue to face a similar fate. In addition, more than 11 million homeowners continue to owe more than their houses are worth.
Many of those troubled borrowers could benefit significantly from the lower monthly payments that would come by refinancing their loans at current rates. But falling home values, loss of income and lackluster credit have kept many people from qualifying for such help.