Existing home sales show slight bump in dragging market

Sales of existing Valley homes picked up slightly in May, as tens of thousands of homeowners competed for buyers in a dragging market.

Some 5,220 existing homes sold last month, up 7.5 percent from April but down 24 percent from the same period last year, a study by Arizona State University’s Realty Studies department shows.

So far this year, 24,265 existing homes have sold — down from 30,830 in the first five months of 2006 and 46,485 the same period in 2005.

The market is following a normal pattern but is still dealing with a huge overhang of unsold homes, Realty Studies director Jay Butler said.

The inventory of existing homes has hit record highs in recent months — soaring to more than 50,000. Many are investment properties, he said.

“(Investors are) in trouble,” Butler said. “They can’t rent them. They’re not making any money. They’re just simply wanting to unload them.”

And the slump has hit some areas harder than others.

Those closer to freeways and jobs are holding steady, while prices in outlying towns continue to drop.

May’s median home price was $262,000, compared with $265,000 in the same month last year. Sellers in Pinal County and the West Valley are struggling to compete with builders offering larger homes, landscaping and other incentives at resale prices, he said. High energy prices and traffic congestion are also impacting sales, he said.

Remodeling is seeing an upswing as more sellers decide to stay put, Butler said. They’re asking themselves, “What are we going to gain if we move?” he said.

In May, 16 percent of sales were for homes priced from $125,000 to $199,999, 42 percent from $200,000 to $200,000 to $299,999 and 39 percent for more than $300,000.