Taking advantage of falling prices, buyers have stormed back to the market, surging the sales of previously owned homes in July, due to lower interest rates and a tax credit for first-time homeowners.

According to the National Association of Realtors, the number of existing home sales rose 7.2 percent in July from June, whereas the sales of condos and single-family homes each rose for the month. It was the largest monthly gain since the group began tracking existing home sales in 1999.

The home sales were also 5 percent higher last month as compared to July 2008. Homes were selling at a seasonally adjusted annual rate of 5.2 million in July, up from a rate of 5 million last year.

Since November 2005, it was the first year-over-year increase in home sales. Around 30 percent of the homes sold in July were distressed properties including short sales or foreclosures. But still, this is a lower percentage as compared to previous months, when nearly half of all existing-home sales were estimated to be foreclosures.

According to the economists, Friday’s numbers offered another signal that the housing market was climbing out of the basement, even as foreclosures and delinquencies get higher amid rising job losses.

The median sale price of homes, nationwide, fell to $178,400. More homes are coming into the market as the number of foreclosures increase and sellers detected a hint of enthusiasm among buyers.

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