Key market indicators for May 2012 suggest that the housing market is steadily moving along a path of stabilization and gradual recovery, reports Realtor.com.

The total US for-sale inventory of single family homes, condos, townhomes and co-ops now stands at 1.88 million units, down -20.07 percent compared to a year ago and well below its peak of 3.10 million units in September, 2007, when Realtor.com first began tracking these data on the national level.

The median age of inventory stood at 83 days in May, -9.78 percent lower than a year ago. The median list price in May, which has been rising steadily since January, was up 3.17 percent on annual basis and now stands at $194,900. Combined, these positive trends suggest a growing optimism on the part of sellers and increasingly balanced housing markets that have worked through much of their excess inventory.

National trends mask pronounced differences across local housing markets. Signs of recovery are evident in a growing number of markets that were once the epicenter of the housing crisis and older industrialized areas in the Northeast and the Midwest are showing emerging signs of weaknesses. For example, the recovery process that began in Florida approximately one year ago has since spread to Phoenix and most recently, California. At the same time, markets such as Reading PA, Allentown, PA and Milwaukee, WI continue to lag behind the rest of the market.

On the whole, however, the majority of markets are showing signs of improvement. For sale inventories in May declined on a year-over-year basis in all but two of the 146 MSAs monitored by Realtor.com, with the for-sale inventory dropping -20 percent or more in roughly half (72) of the markets covered. At the same time, the median list price was up by 1 percent or more on a year-over-year basis in 108 markets, with 51 markets registering increases of 5 percent or more. Only 22 markets had a year-over year list price decline of 1 percent or more. While markets remain fragile, if current trends continue, 2012 could well be the beginning of a broad-based housing recovery.

On a year-over-year basis, the median list price in May was up by 1 percent in 108 of the 146 MSAs monitored by Realtor.com, and up by 5 percent or more in 51 MSAs. The median list price was down by 1 percent or more in 22 markets, with only 3 markets registering declines of -5 percent or more. The remaining 16 markets have not experienced a significant change in median list prices compared to a year ago. This strong performance is another indication that the market is gaining steam in many parts of the country and represents a considerable improvement over patterns observed in May 2011.