Backlog of homes for sale drops again in May

Real estate may finally be finding a bottom as the number of homes listed for sale in 28 major metropolitan areas was down 3.9 percent in May from April, according to data from ZipRealty. Compared with May of 2008 that number is down 24 percent, an even more encouraging sign that we may be climbing out of the deep hole.

The number of homes available for sale was about four million in April, according to the National Association of Realtors, which was down about 11 percent from a year earlier. Yet the exact level of the supply of homes is a bit unclear because the numbers do not include the foreclosed homes that banks are preparing to sell.

Industry analysts estimate that about one-half of those homes are not listed on the market at any given time. Some homes need repair, some are being offered as rentals and others still face litigation or other delays.

But there is reason to hope we are seeing a bottom to the market slide given the drop in listings and the fact that few new homes are being built. Thomas Lawler, a housing economist, told The Wall Street Journal that the drop in the number of resales and the fact that new home construction is flat "indicate that home prices in many parts of the country could be nearing a bottom."

Another sign that we could be nearing the bottom was a report from Integrated Asset Services, which reported Tuesday that its national house price index in April was unchanged from a month earlier, but down 13 percent from April 2008. A big unknown though is whether rising home mortgage interest rates could slow home purchases again. Yet there are good bargains out there and the $8,000 first time buyer credit is enticing first time home buyers.

Lita Epstein has written more than 25 books including The 250 Questions You Should Ask About Buying Foreclosures.

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