"We're looking at a dual market right now," said Sherry Chris, chief executive of Better Homes and Gardens Real Estate.
The National Association of Realtors said Wednesday that home sales rose 2.9 percent to an annual rate of 4.68 million in April from a downwardly revised pace of 4.55 million in March. Sales were 4.6 percent below April last year, without adjusting for seasonal factors.
Compared with January, the lowest point in the housing recession, April sales were up nearly 4 percent. But compared with the peak in September 2005, sales are still down 35 percent.
And they have not kept pace with foreclosures, which continue to pile up at an alarming pace. Those properties helped drag down the median sales price to $170,200.
Affordability brought Rogelio Gonzalez, 44, back into the Miami market. Gonzalez sold his five-bedroom home in 2004 for $485,000 and has been renting ever since. Now, prices have dropped to the point where he wants to buy a foreclosure in the $150,000 range, but he's finding plenty of competition.
"Since I sold at the highest point, I was waiting until I could buy at the lowest point," Gonzalez said. "I've been to open houses and I've run into eight, 10, 15 people looking for houses."
Foreclosures and other distressed sales made up about 45 percent of all transactions in April, according to the Realtors group.
In Phoenix, Floyd Scott, broker-owner of Century 21 Arizona-Foothills, said roughly 70 percent of sales in his area are from distressed buyers. But that can't last forever, he said, noting that "we're running out of inventory."
Nationally, however, the number of unsold homes on the market at the end of April rose almost 9 percent from a month earlier to nearly 4 million. That's a 10-month supply at the current sales pace, and was particularly troubling to economists.
The rise in unsold homes "suggests foreclosure activity may be adding homes to the market faster than sales are removing them," wrote David Resler, chief economist with Nomura Securities.
Another big problem is the lack of activity at the higher-end of the housing market. Lenders have tightened standards dramatically, especially for so-called "jumbo" loans above $730,000 that cannot be purchased by Fannie Mae or Freddie Mac, the government-controlled mortgage companies.
The Realtors group is pushing for the Federal Reserve to start buying up those loans. It also wants higher loan limits enacted last year to apply to the whole country, not just expensive areas like California and New York.
In San Francisco, properties listed for $1 million and above are languishing on the market. "That's where we're really feeling the pinch," said Ben Coleman, owner of Century 21 Hartford Properties.
In Philadelphia, "the luxury market is still dragging because of the difficulty for jumbo loans and the lack of cash from buyers," David Friedman, an agent with Coldwell Banker Preferred. "It's pretty much at a nonexistent level right now."
Jumbo loans made up only 5 percent of the mortgage market in the first quarter of this year, down from 17 percent two years ago, according to trade publication Inside Mortgage Finance.
Rates for 30-year jumbo loans are averaging around 6.3 percent, compared with around 5 percent for non-jumbo loans, according to data publisher HSH Associates.
Since banks generally hold jumbo loans on their books, it's not surprising that they are keeping lending standards tight, noted Keith Gumbinger, a senior vice president with HSH Associates, who said, "It's not a risk-free investment."
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