I was surprised to see the size of the turnaround in the number of homes sold in Sacramento County, California.

Metro Phoenix home sales haven’t begun to bounce back to anything close to the same degree… yet. (See the blue line in the graph below.)

And it’s easy to see why

The upswing in demand that we’re seeing in Sacramento County is a result of falling prices… This May’s median home sold for $225,000, down 34.4% from last year’s median of $343,000.

Looking at Arizona MLS residential real estate sales data for metro Phoenix, the median home price fell from $250,000 in April 2007 to $209,900 in April 2008 (latest data available). That is a 16% decrease versus Sacramento County’s 34% decrease in median home price.

The number that best explains the huge fall in the Sacramento CA median home price is here; “REO’s continue to account for the bulk of sold homes, at 64.1% of sales in May.”

64.1%? Yikes!

Sacramento makes the Phoenix market look absolutely sunny.

ADDED: Home sales in Sacramento can’t maintain this high pace without eventually putting upward pressure on prices. In fact, higher prices may be what eventually slows the pace of home sales.