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Home Sales Drop In June

Gains in May offset as buyers wait for bargains

By Mark Huffman
ConsumerAffairs.com

July 24, 2008

With home prices continuing to fall, NAR President Richard F. Gaylord, a broker in Long Beach, California, says buyers appear to be waiting for the best bargain.

"A recent online survey of Realtors shows nearly a quarter of potential home buyers are waiting on the sidelines," he said. "However, timing the market can be very tricky, which is why home buyers should always have a long-term view to build wealth."

Buyers, however, continue to find more houses to choose from. Total housing inventory at the end of June rose 0.2 percent to 4.49 million existing homes available for sale, which represents an 11.1.-month supply at the current sales pace, up from a 10.8-month supply in May.

"About four in 10 homes are purchased by first-time buyers, which frees existing owners to trade up," said Lawrence Yun, NAR's chief economist. "With many potential first-time home buyers on the sidelines, a first-time buyer tax credit would have a significant positive impact on both housing and the economy. Combined with permanent increases to mortgage loan limits and enhancing the FHA loan program, the housing stimulus package working its way through Congress would go a long way toward helping consumers and boosting the overall economy."

However, it may pay buyers to delay their purchase. The national median existing-home price for all housing types was $215,100 in June, down 6.1 percent from a year ago when the median was $229,000. Yun said there is a downward distortion in the price data.

"With short sales and foreclosures accounting for approximately one-third of transactions, it's hard to make an apples-to-apples comparison with a year ago when they were only a minor portion of the market," he said.

A Bargain Is A Bargain

Despite the overall sales decline, unpublished snapshot data shows existing-home sales rising significantly from a year ago in Bakersfield, Calif.; Fort Myers, Fla.; and Las Vegas.

"Sales are now beginning to pick up in Orlando, Fla., Phoenix, and Oakland, Calif.," Yun said. "Interestingly, sales fell in Atlanta, Houston, and Kansas City, Mo., despite affordable home prices and solid local employment conditions."

According to Freddie Mac, the national average commitment rate for a 30-year, conventional, fixed-rate mortgage rose to 6.32 percent in June from 6.04 percent in May; the rate was 6.66 percent in June 2007.

Single-family home sales declined 3.2 percent to a seasonally adjusted annual rate of 4.27 million in June from 4.41 million in May, and are 14.8 percent below the 5.01 million-unit pace in June 2007. The median existing single-family home price was $213,800 in June, which is down 6.7 percent from a year ago.

Existing condominium and co-op sales rose 1.7 percent to a seasonally adjusted annual rate of 590,000 units in June from 580,000 in May, but are 19.7 percent below the 735,000-unit level a year ago. The median existing condo price(4) was $224,200 in June, which is 2.2 percent lower than June 2007.

Regionally, existing-home sales in the West rose 1.0 percent in June to a pace of 1.03 million but are 6.4 percent lower than a year ago. The median price in the West was $288,400, which is 17.2 percent below June 2007.

In the South, existing-home sales fell 3.1 percent to an annual rate of 1.85 million in June, and are 18.1 percent below June 2007. The median price in the South was $185,300, down 2.4 percent from a year ago

Existing-home sales in the Midwest declined 3.4 percent to an annual pace of 1.12 million in June, and are 17.6 percent below a year ago. The median price in the Midwest was $175,300, up 2.8 percent from June 2007.

In the Northeast, existing-home sales fell 6.6 percent to an annual rate of 850,000 in June, and are 15.8 percent below June 2007. The median price in the Northeast was $256,700, down 12.6 percent from June 2007.

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