Existing-home sales were down again in May and were 15.3 percent below the pace seen a year earlier.

Lawrence Yun, NAR chief economist, said temporary factors held back the market in May, as implied from prior data on contract signings. "Spiking gasoline prices along with widespread severe weather hurt house shopping in April, leading to soft figures for actual closings in May," he said. "Current housing market activity indicates a very slow pace of broader economic activity, but recent reversals in oil prices are likely to mitigate the impact going forward. The pace of sales activity in the second half of the year is expected to be stronger than the first half, and will be much stronger than the second half of last year."

Three of the four regions in the United States posted declines in May. The West's existing-home sales remained unchanged from the month prior.

The Midwest saw the largest decline, falling 6.4 percent. Its pace is a staggering 22.7 percent below last year. This region's median price is down year over year, too. It now stands at $136,400.

The South followed suite, with its median price falling 3.1 percent to $149,200. Existing-home sales are down 5.1 percent.

The Northeast fared better when it came to median pricing. Up 6.1 percent from 2010, it is the "priciest" of regions at this time, with a median price of $241,500. Existing-home sales declined 2.5 percent and are still 13.5 percent below May 2010.

"The price decline could be diminishing, as buyers recognize great bargain prices and the highest affordability conditions in 40 years; this will help mitigate further price drops," Yun said. "Home prices are rising or very stable in local markets with improved employment conditions, such as in North Dakota, Alaska, Washington, D.C., and many parts of Texas."

Looking at the demographics of recent purchasers, first-time buyers purchased 35 percent of homes, while investors made up 19 percent of the market. All-cash transactions accounted for 30 percent of the market, up 5 percent from May 2010.

According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage was 4.64 percent in May, down from 4.84 percent in April; the rate was 4.89 percent in May 2010.

NAR President Ron Phipps, broker-president of Phipps Realty in Warwick, R.I., said a number of proposals being considered in Washington could further jeopardize the housing recovery. "We're concerned about the flow of available capital, including a possible rule that would effectively raise minimum downpayment requirements to 20 percent," he said. "We don't need to throw the baby out with the bath water – increasing downpayment requirements would effectively shut many qualified families out of the market. What we critically need is a return to the basics of providing safe mortgages to creditworthy buyers willing to stay well within their budget."

Published: June 23, 2011

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Carla Hill, M.A., works on the Realty Times staff as Managing Editor for our online publication. She also is Producer for the real estate news channel, seen daily on RealtyTimes.com and on video newsletters nationwide.