The housing market finally got some good news today, as the National Association of Realtors (NAR) reported that the pace of existing-home sales rose 2 percent from April to May. This translates into a seasonally adjusted annual pace of 4.99 million units. However, that is still 15.9 percent lower than the same period last year.

The supply of existing homes for sale also dipped slightly to 10.8 months of inventory, or 4.49 million homes. That's still a lot of homes, noted Lawrence Yun, NAR's chief economist. "The large supply of homes on the market clearly favors buyers, and it should take several months to draw the inventory down," he said. "Stabilization in home prices can only occur with buyers returning to the market, so we are encouraged by rising home sales, particularly in distressed markets. Foreclosures and short sales appear to be a larger part of the market, particularly in California, and are creating a drag on current home prices."

Sales prices are falling, as both the Case-Shiller and the federal government's home price indices showed earlier this week. According to NAR, the national median existing-home price stood at $208,600 in May, which represents a 6.3 percent drop year-over-year.

Alison Rice is senior editor, online, for BUILDER magazine.