Lower prices and the first-time buyer home credit boosted home sales in May for the first back-to-back monthly gain since September 2005, according to the National Association of Realtors.

Existing home sales – which includes single-family, townhomes, condos and co-ops – were up 2.4 percent to a seasonally adjusted rate of 4.77 million units last month, but still remained 3.6 percent below the 4.95 million units sold in the same month last year.

First-time homebuyers account for 29 percent of transactions, according to a NAR survey in May.

“Historically low mortgage interest rates clearly drew buyers into the market, and housing remains very affordable even with a recent uptick in rates,” Lawrence Yun, NAR’s chief economist said in a news release.

However, he added that the increase in sales is less than expected “because poor appraisals are stalling transactions.” And, some contracts are falling through as a result of faulty valuations that keep buyers from getting a loan, he said.

“In the past month, stories of appraisal problems have been snowballing from across the country with many contracts falling through at the last moment. There is danger of a delayed housing market recovery and a further rise in foreclosures if the appraisal problems are not quickly corrected,” Yun added.

Single-family home sales rose 1.9 percent to a seasonally adjusted annual rate of 4.25 million in May from a pace of 4.17 million in April, but are 3.0 percent below the 4.38 million-unit level in May 2008.

The median existing single-family home price was $172,900 in May, down 16.1 percent from a year ago.

Existing condominium and co-op sales increased 6.1 percent to a seasonally adjusted annual rate of 520,000 units in May from 490,000 in April, but are 8.9 percent below the 571,000-unit level in May 2008.

The median existing condo price was $173,800 in May, down 21.9 percent from a year earlier.

IHS Global Insight U.S. Economist Patrick Newport said he expects sales to sag over the next 12 months. But added: “In 2010, an improved economy and improved affordability will bring buyers into the market, and sales will start to rebound.”