Existing home sales fall in May Despite 10.3% drop, shrinking ranks of metro area's unsold houses on market seen as a plus Byt Ted Evanoff, The Indianapolis Star Across the metro area, job growth has been relatively stable. So have interest rates. Normally, that's a formula for a solid real estate market. But the pace of existing home sales declined again in May. Throughout the nine-county Indianapolis area, 2,941 existing houses and condominiums changed hands last month, 10.3 percent fewer than in May 2006, reported F.C. Tucker Co., the largest real estate business in the state, on Monday. May's decline shows the real estate market remains sluggish, though the industry sees a bright spot -- the supply of houses for sale is getting proportionately smaller. In May, the inventory of unsold homes -- 18,000 houses and condos -- equaled a six-month supply. Earlier this year, it exceeded 10 months. "I think we are already in the early stages of a recovery,'' said G.B. Landrigan, head of Indianapolis real estate firm Landrigan & Co. Real estate veterans suggest the sluggish market reflects the hangover left from the excesses a few years ago: Developers overbuilt on new tracts, lessening consumer interest in older homes, Landrigan said. Indianapolis' soaring foreclosure rate poured homes on the market. Early in 2006, the metro area ranked first nationwide in foreclosures. Buyers flooded the home market, attracted by low interest rates. From 2004 to 2006, nearly 170,000 existing metro-area homes changed hands, about double the sales volume in any three-year period a decade ago. The boom brought many people into the market who would have been shopping today had they not bought earlier, said H. James Litten, president of Tucker's residential real estate services division. And lately, hard-hit subprime lenders have contracted. The end result: Fewer would-be borrowers qualify for home loans. All that has translated into a seesaw sales pace. Despite a record 908,900 metro-area jobs in April, the most for any April ever, the housing market hasn't briskly improved. Home sales rose in April and January but declined in May, March and February. Overall, 13,100 homes changed hands this year through May compared with the same months last year, a decline of 5.2 percent, Tucker reported. "I have never, in my 35 years in the industry, seen the market the way it is. I won't say it is being soft, but it is being inconsistent,'' said Litten His company gathers monthly sales data from the Metropolitan Indianapolis Board of Realtors, which tracks all home sales in the region. MIBOR will issue its own May report later in June. Landrigan, which tracks a 13-county region centered on Indianapolis, said home sales declined 11.6 percent in May compared with May 2006. Both the Tucker and Landrigan reports include pending sales -- home sales that may not have gone through at the time the report was made. Average sales prices also have declined. In May, the typical home changed hands for $145,200, down 2.5 percent from a year earlier, Litten said. He noted the average this year has been brought down by foreclosed properties selling at an average of about $70,000.