Mixed news in data on existing-home sales

Sales of previously occupied homes rose modestly from April to May, the third monthly increase this year, but signs of a housing recovery are fragile at best.

The National Association of Realtors said yesterday that existing-home sales rose 2.4 percent to a seasonally adjusted annual pace of 4.77 million, up from a downwardly revised rate of 4.66 million in April. But the result missed analysts' expectations.

"While activity has stabilized, a meaningful recovery has yet to begin," wrote Paul Dales, U.S. economist with Capital Economics.

About one in three homes sold last month were foreclosures or distressed sales, dragging down the median price to $173,000 -- 16.8 percent below a year ago. Falling prices coupled with new rules for property appraisers have caused many transactions to fall apart or be delayed.

One bright spot was that the number of unsold homes on the market at the end of May fell 3.5 percent to nearly 3.8 million. That is a 9.6-month supply at the current sales pace, compared with about six months in a normal market.

That drop was "the best news in the report," said Joseph LaVorgna, Deutsche Bank's chief economist.

The Richmond area continues to experience a challenging market, said Laura Lafayette, the CEO of the Richmond Association of Realtors. The results for the region and for Virginia are issued on a quarterly basis, not monthly.

"Sales and sale prices remain down when compared with last year," she said. "But much of the drop in the overall sale price is due to the fact that the majority of the homes selling in our area are priced below $300,000. So naturally, the average sale price will be lowered by this activity."

Mortgage rates are another problem, economists say. Interest rates for 30-year home loans, which fell to all-time lows this spring, have been edging back up. The average rate was 5.38 percent last week, according to Freddie Mac.

For the fourth consecutive month, existing-home sales increased on a year-over-year basis in Washington and the Florida cities of Miami, Orlando and Tampa, according to The Associated Press-Re/Max Housing Report.

But the report said that median sales prices fell in 16 metro areas in the South, including drops of more than 40 percent in Miami and Orlando, where a glut of unsold homes due to foreclosures remains a problem.

Despite signs of life in parts of the South, two North Carolina metro areas -- Charlotte and Raleigh-Durham -- saw sales fall by 39 and 31 percent, respectively. Median prices dipped 10 percent in Raleigh-Durham and 9 percent in Charlotte, the report showed.

Deputy Business Editor Gregory J. Gilligan and The Associated Press contributed to this report.