The U. S. Department of Commerce and Realtors reported that lower home prices and a drop in mortgage rates are fueling sales.
Nationally, existing-home sales rose for the third consecutive month with inventory easing and home prices declining less sharply in June, according to the National Association of Realtors. Sales, including single-family, townhomes, condominiums and co-ops, increased 3.6 percent to a seasonally adjusted annual rate of 4.89 million units in June from a downwardly revised pace of 4.72 million in May, but are still 0.2 percent lower than the 4.90 million-unit level in June 2008.
Lawrence Yun, NAR chief economist, said he is hopeful about the gain.
"The increase in existing-home sales occurred in all major regions of the country," he said. "We expect a gradual uptrend in sales to continue due to tax credit incentives and historically high affordability conditions. Despite the rise in closed transactions, many Realtors are reporting lost sales as a result of new appraisal standards that went into effect May 1 of this year."
A June survey of NAR members showed 37 percent experienced at least one lost sale as a result of the new Home Valuation Code of Conduct, with seven out of 10 reporting an increased use of out-of-area appraisers. Some 70 percent of NAR appraiser members said consumers were paying higher fees, while 85 percent report a perceived reduction in appraisal quality.
"Clearly the process needs to be revised, but the most logical approach is to use appraisers with local expertise, industry designations and access to local data, who make a physical examination of the property and use apples-to-apples comparisons with nearby home sales," Yun said. "In many cases, normal homes are being compared with distressed homes sold at a discount, which often are in subpar condition. This is causing real harm to both buyers and sellers."
According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage rose to 5.42 percent in June from 4.86 percent in May; the rate was 6.32 percent in June 2008. Mortgage interest rates have trended lower in recent weeks.
Total housing inventory at the end of June fell 0.7 percent to 3.82 million existing homes available for sale, which represents a 9.4-month supply at the current sales pace, down from a 9.8-month supply in May. Raw inventory totals are 14.9 percent below a year ago.
"This is another hopeful sign," Yun said. "If we can keep the volume of sales above the level of new inventory, prices could stabilize in many areas around the end of the year."
An NAR practitioner survey in June showed first-time buyers accounted for 29 percent of transactions, unchanged from May, and that the number of buyers looking for homes is up nearly 12 percentage points from June 2008.
NAR President Charles McMillan, a broker with Coldwell Banker Residential Brokerage in Dallas-Fort Worth, said there are very good opportunities.
"Despite some of the challenges, the housing market continues to demonstrate signs of recovery," he said. "The temporary first-time buyer tax credit is clearly helping people make a decision and is contributing to the overall stimulus impact, but since it's taking longer to close transactions, many would-be beneficiaries may not be able to take advantage of the credit before the December 1 expiration date.."
The national median existing-home price for all housing types was $181,800 in June, which is 15.4 percent below June 2008. Distressed properties, which accounted for 31 percent of sales in June, continue to downwardly distort the median price because they generally sell at a discount relative to traditional homes.
Single-family home sales rose 2.4 percent to a seasonally adjusted annual rate of 4.32 million in June from a level of 4.22 million in May, and are 0.2 percent higher than the 4.31 million-unit pace a year ago. The median existing single-family home price was $181,600 in June, which is 15.0 percent below June 2008.
Existing condominium and co-op sales jumped 14.0 percent to a seasonally adjusted annual rate of 570,000 units in June from 500,000 in May, but are 3.1 percent below the 588,000-unit level in June 2008. The median existing condo price was $183,300 in June, down 18.9 percent from a year ago.
Regionally, existing-home sales in the Northeast rose 2.5 percent to an annual pace of 820,000 in June, but are 4.7 percent below a year ago. The median price in the Northeast was $249,400, down 5.9 percent from June 2008.
Existing-home sales in the Midwest increased 0.9 percent in June to a level of 1.10 million but are 1.8 percent lower than June 2008. The median price in the Midwest was $157,000, which is 9.1 percent below a year ago.
In the South, existing-home sales rose 4.0 percent to an annual pace of 1.81 million in June but are 3.7 percent below a year ago. The median price in the South was $163,200, down 11.9 percent from June 2008.
Existing-home sales in the West improved by 6.4 percent to an annual rate of 1.16 million in June, and are 11.5 percent higher than June 2008. The median price in the West was $214,800, which is 24.9 percent below a year ago.
The California Association of Realtors reported its unsold inventory index of single-family homes indicates the number of months needed to deplete the supply of homes on the market. The median number of days it took to sell a single-family home was 46.1 days in December, compared with 66.7 days for the same period last year.
Home sales increased 84.9 percent in December in California compared with the same period a year ago, while the median price of an existing home fell 41.5 percent.
The median price of an existing, single-family detached home in California during December 2008 was $281,100, a 41.5 percent decrease from the revised $480,820 median for December 2007, CAR reported. The December 2008 median price fell 2 percent compared with November's revised $286,850 median price.
Statewide, the 10 cities with the highest median home prices in California during December 2008 were: Danville, $1 million; Santa Barbara, $952,500; Santa Monica, $825,000; San Ramon, $711,500; Redondo Beach, $682,500; San Clemente, $675,000; San Francisco, $625,500; Arcadia, $625,000; San Mateo, $618,5000; and Carlsbad $615,000.
Cities with the greatest median home price increases in December 2008 compared with the same period a year ago were: Santa Barbara, 12.7 percent; Cerritos, 9.1 percent; Danville, 8.4 percent; Atascadero, 8.1 percent, and San Pedro, 1.2 percent.