The key to understanding what's happening for housing and real estate right now is to remember this: In a recovery that's just getting going, don't expect all the economic arrows to point the same way at any given moment.

The latest numbers on housing sales, prices, mortgage rates and foreclosures are great examples of that point:

Sales of existing houses came in on the upside for May, with a 2.4 percent increase nationally over the month earlier.

That's the first consecutive monthly gain in resales in the U.S. since way back in September of 2005.

But then again -- last month also saw sales of newly-constructed houses fall by six tenths of a percent, as low-priced foreclosures swamped the market and pulled buyers away from builders' showrooms and subdivisions.

Meanwhile, prices in both the resale and the new construction segments continued to head downwards. According to the National Association of Realtors, the median home sale price in May was $173,000, 16 percent below what it was a year earlier.

The number one reason for the drop, according to Lawrence Yun, chief economist for the National Association of Realtors, was the heavy presence of foreclosures carrying rock-bottom prices in many markets.

Nationally, one of every three homes that went to closing in May was a "distressed" situation -- foreclosure or short sale. In some hard-hit areas, the percentage was much higher -- well over half.

Prices won't really stabilize until foreclosures fall to a much lower proportion of total transactions.

Now, on the other hand, there were scattered reports of resale prices beginning to get a foothold. For example, in the Tampa Bay metropolitan market on Florida's west coast, median prices jumped by four percent. They were also up slightly in Orlando.

On the sales side, Florida markets were red hot, with record increases in closed transactions. Florida as a whole saw a 16 percent statewide gain in May. But Broward County sales were up a phenomenal 47 percent and Orlando condo sales were off the charts for the month -- up 206 percent!

Looking ahead, mortgage rates appear to have at least temporarily reversed their recent increases. According to the Mortgage Bankers Association, the average 30-year fixed rate loan went for 5.4 percent last week -- that's down from 5. 5 percent the week before and close to 6 percent just a few weeks ago, based on quotes from major lenders.

Thanks to slightly lower rates, homebuyers continue to pour into the mortgage market. Applications for home purchase loans were up by 7.3 percent last week, pointing to continuing strength in sales during the coming several months.

Published: June 30, 2009

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Kenneth R. Harney writes an award-winning, nationally-syndicated column on housing and real estate from Washington, D.C. He is also managing director of the National Real Estate Development Center, a professional education company. He is a past member of the Federal Reserve Board's Consumer Advisory Council, a committee that by federal statute reviews all Fed actions on home mortgage, consumer credit and banking industry regulation. He served as a member of the U.S. Department of Housing and Urban Development's Working Group on Computerized Loan Origination (CLO) systems, and is a member of the Editorial Board of the Fannie Mae Foundation's journal, Housing Policy Debate. He is the author of two books on mortgage finance and real estate.