The latest market analysis (for May 2011) was released by our local Multiple Listing Service. The good news is that sales are up over last year, with about 9,000 homes sold for three months in a row. This is due to the record affordability of housing in the metropolitan Phoenix area.

Another good sign is that inventory (homes for sale) declined to 31,166 homes on the market at the end of May, down from the November 2010 high of 45,353. Other good news is that foreclosures are continuing their downward trend. In May they totaled 30,517 (in December 2010 it was 41,057). Therefore the lender owned sales of homes fell to 43.8% from 48.3% in December.

The bad news is that the median sale price for May is the lowest of the decade at $108,300, representing a 2.4% decline from April. The average sales price, also the lowest of the decade, was $158,780. And the Pending Price Index, which is an estimate of future sale prices, guesstimates a median price for June, July and August of $114,00, $106,000 and $97,000 respectively.

The hope analysts had in the first quarter of this year that home prices would be rising by now was misplaced (and they admit it!) Prices may not have bottomed out yet. The problem is the continued distressed sales (short sales and those by banks after foreclosures). Although there has been a decrease, short and REO sales were 65.2% of the May total.

The other bad news is that the volume of homes sold in the lower price ranges has not been matched further up the value ladder. A whopping 96% of all homes sold closed for less than $400,000. In the higher price ranges, there is lots of inventory, buyers are few, and they are very picky and price sensitive. As a result, many people who have had their home listed have taken their homes off the market after languishing unsold, or simply have let them go to foreclosure.