–Nat’l June Median Price $183,700 Vs. Revised $174,600 in May
–NAR Econ Yun: Should Inventories Stay Elevated, Renewed Price Pressure
–NAR Econ Yun: Now Think Post-Tax-Credit Sales Soft for Four Months

By Denny Gulino and Ian McKendry

WASHINGTON (MNI) – U.S. sales of existing single-family homes, town
homes, condominiums and cooperatives fell in June another 5.1%% to a
5.37 million rate while inventories, up to 8.9 months of supply, are
set to rise to 10 months in the next report, the National Association of
Realtors reported Tuesday morning.

The June sales rate was 9.8% higher than a year earlier.

While above the expectations for a 5.25 million rate, NAR Chief
Economist Lawrence Yun said June’s sales softness may remain the case
for the next few months, longer than he originally expected after the
April 30 end of the contract deadline for the government tax credit.

The data on pending closings, he said, suggest the level of
inventories, at 3.99 million in June, will continue to grow and that the
10-months of supply — last hit in April of last year, will persist at
least until a seasonal improvement sets in toward the end of the year.
If that yearend improvement does not happen, he said, there will be
renewed downward pressure on house prices.

The June national median price was $183,700, up 1.0% from
a year ago.

Single-family home sales in June were down 5.6% to a seasonally
adjusted annual rate of 4.70 million, with single-family prices higher
in 10 of 19 metro areas.

Sales were down in the West by 9.3% in June, down in the South by
6.5% and down in the Midwest by 7.5%. Sales rose in the Northeast by
7.9%.

The so-called distressed sales proportion remained about 32% in
June but the composition changed, so those attributed to foreclosures
lagged while short sales rose. “All backlogs on short sales are
beginning to move through the system,” Yun said.

All-cash sales. not captured in the weekly mortgage applications
data, remained at an exceptionally high proportion of the total, at 24%,
instead of what used to be typical, around 10%.

First-time buyers accounted for about 25% of June sales and
continue to drive the monthly fluctuations, Yun said.

So far, Yun said, the “hard data” on sales in the Gulf region don’t
reflect a depressing effect from the oil blowout, but “soft data,”
anecdotal accounts from regional Realtors, he said, suggest sales are
being postponed or canceled in those states actually bordering the
water.

“Delays in transactions may show up in coming months,” Yun
told reporters. “Contract signings really fell off” after the end
of the contract deadline for the tax credit. The deadline for
actual closings was extended through September. “Closing activity
in the near term will be very low.”

“What you really need to look at, is how the economy recovers,” he
said. “Economic uncertain is clouding the buying opportunity” afforded
by low mortgage rates. “It remains to be seen what happens in the second
half,” he continued. “I initially thought there would be a pause after
the tax credit of about two months but it could be three or four
months.”

“It’s still a fragile situation in the housing market,” he
said. “Home prices are still remaining firm” because “prices have
already overcorrected, so there’s very little room to go down.”
Nevertheless, he repeated, if the inventories stay at or above 10 months
supply for longer than three or four months, there will be new
downward pressure on prices.

While this year’s second instance of the tax credit “did
not have that big boost as did the initial one,” the presence of
tax credits in the market since February of last year did keep sales
rising despite the loss of jobs, looking at the broad picture, he
said.

Now, “We are getting jobs creation, but at a slow pace.” A
longer term concern, he said, are “the number of homeowners who
are underwater,” variously estimated at up to what Yun said is a
probably too-high 20%. That overhang of homeowners who are in
distress may mean “the housing market may not bounce back as
quickly.”

The existing-home sales report for July is scheduled to be released
Tuesday, August 24, again at 10 a.m. ET.

** Market News International Washington Bureau: 202-371-2121 **

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