While there wasn’t much good news in the home price department last month, sales volume and inventory made for another story.

Sales activity quickened in May, resulting in a 5.2 percent decline in volume from a year prior. This number doesn’t seem all that impressive on the surface, but compared to the 30 percent annual declines on display earlier in the year it is actually a big improvement.

Inventory also flattened again so that it was just 1.4 percent over last year’s figure.

The number of months’ worth of inventory declined to 7.6 months — still in or near bear market territory, but a vast improvement over the 12 months of inventory we saw earlier in the year.

That’s the good news. The bad news is that as much as sales have been increasing they still aren’t keeping pace with foreclosure activity.

Homes going into foreclosure tend to eventually end up as must-sell inventory, which is the type of inventory that puts the most downward pressure on home prices. So while volume has increased and current inventory has moderated, San Diego’s housing market will probably not be out of the woods until that pipeline of future must-sell inventory clears out a bit — or at least until it stops filling up so fast.

— RICH TOSCANO

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