Sales of existing homes unexpectedly increased in May as home buyers responded to home price declines according to the National Association of Realtors last Thursday.

The number of existing homes and condominiums sold during May rose 2% to a seasonally adjusted annual rate of 4.99 million units in May from a level of 4.89 million in April.

But sales remain 15.9% below the 5.93 million-unit sold in May 2007, the report showed.

Thursday's report marks only the second time in 10 months that sales have increased.

The existing homes available for sale decreased at the end of May by 1.4% to 4.49 million existing homes. With this the inventory of existing homes available for sale decreased to a 10.8-month supply at the end of May from an 11.2-month supply in April, according to the report.

The large supply of homes on the market favors buyers and will take several more months to draw the inventory down.

"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," Lawrence Yun, the NAR’s chief economist said.