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Home prices keep falling, but sales revive as buyers bargain shop

More properties went on the market in April. Anxious sellers – including banks – boosted the inventory of unsold homes to 10.2 months' worth.

By Ron SchererStaff writer / May 27, 2009

A "for sale" sign sits in front of a home in Alexandria, Virginia, in this August 2008 file photo. US existing home sales climbed 2.9 percent in April, rebounding from a decline in March as plummeting prices drew buyers, the National Association of Realtors reported Wednesday.

Saul Loeb/AFP/NEWSCOM/FILE

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In April, Americans continued to bargain hunt for houses, a trend that is helping to move properties.

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In the latest evidence that lower prices are attracting buyers, the National Association of Realtors (NAR) reported Wednesday that existing home sales rose 2.9 percent compared with March.

But housing prices are still falling, dropping 15.4 percent from last April. And, housing inventory continues to swell as anxious sellers – including banks – list more houses for sale.

“What we are seeing is some stabilization here,” says Bob Brusca, an economist with Fact & Opinion Economics, a consulting firm in New York.

Spring's monthly housing numbers are important because they come at a time when many people start to think about listing their homes for sale, especially if they will be moving to a different city or neighborhood. If sales are rising, it can give sellers more confidence. But if prices are falling, it might also tell them their net worth is dropping.

“If people feel their house is falling in value, they may think, ‘I have to save more,’ ” says Stuart Hoffman, chief economist at PNC Financial Services in Pittsburgh. “And that is what is going on: People are holding back on spending.”

Still, the sales numbers were somewhat improved. In April, existing single-family homes, town homes, condos, and co-ops sold at a seasonally adjusted annual rate of 4.68 million units, up from a revised rate of 4.55 million units in March. This rate has pretty much held steady through the first quarter of the year.

The stability may be a sign that the housing market, at least as far as sales are concerned, is bottoming out, says Mr. Hoffman. “Green shoots are not defined as going up, but in not going down,” he says. “But that’s not happening on the price side.”

The national median price for all types of existing homes was $170,200, down 15.4 percent from a year ago, according to NAR. However, distressed sales such as foreclosures, which represented 45 percent of all sales, continue to distort prices.

In most parts of the country, first-time buyers are dominating real estate sales. That’s the case in North Texas, reports Dee Dee Trosclair, regional director at Keller Williams Realty in Dallas.