Sales of Existing Homes Rise 4.7% in May : Housing: California realtors report a 5.8% rise. Lower mortgage rates and lower prices are credited.

The lowest mortgage rates in more than a year pulled prospective home buyers back into the market in May, trade associations reported Monday. Existing home sales rebounded by 4.7% nationwide from their lowest level in nearly three years, and California resales were up 5.8%.

“Rates have come down significantly,” noted economist David Lereah of the Mortgage Bankers Assn., who said a rising number of mortgage applications hints that June sales figures will show an improvement too. “I think we’ve hit bottom and are on our way back up.”

But Lereah and other economists acknowledged that a slowing economy will keep sales for the year below the 3.95 million for 1994, even with lower rates. The National Assn. of Realtors predicts sales of 3.65 million this year.

In May, the association said, sales totaled a seasonally adjusted annual rate of 3.55 million. That was up from 3.39 million in April, when they dropped 6.4% to the lowest level since a 3.36 million rate in June, 1992.

In California, 380,360 existing single-family homes closed escrow last month, on a seasonally adjusted annualized basis, up from 359,440 in April, the California Assn. of Realtors reported. Sales statewide were down 30% from May, 1994, when 496,220 homes closed escrow.

Lereah said the increase in sales of existing homes should help spark construction of new homes. New-home building has been sluggish in recent months because of large inventories.

Surveys by the National Assn. of Home Builders show greater traffic by prospective buyers in recent months as mortgage rates fell, making housing more affordable.

Thirty-year fixed-rate mortgages averaged 7.91% in May, down from 8.32% in April and from 9.15% in January. It was the lowest monthly average since the 7.15% for February, 1994.

Also helping to make existing homes more affordable was a 0.7% drop in the median price nationwide, to $109,100 from $109,900 a year earlier, according to the NAR report. In California, the median price slipped slightly to $176,680 from $176,820 in April.

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Home Resales

Seasonally adjusted annual rate, in millions of units:

May 1995: 3.55

Source: National Assn. of Realtors