Despite a forward leap by prices, a surge in contract cancellations led to a sudden easing in existing-home sales over June, according to a ""National Association of Realtors"":http://www.realtor.org/ (NAR) report. Analysts at the trade association placed blame for the lax numbers at the feet of wary lenders and continuing economic uncertainties.[IMAGE]
""With record high housing affordability conditions thus far in 2011, we'd normally expect to see stronger home sales,"" Ron Phipps, president of ""NAR"":http://www.realtor.org/ and broker-president of Rhode Island-based ""Phipps Realty"":http://www.phippsrealty.com/, said in a statement. ""Even with job creation below expectations, excessively tight loan standards are keeping many buyers from completing deals. Although proposals being considered in Washington could effectively put more restrictions on lending, some banking executives have hinted that credit may return to more normal, safe standards in the not-too-distant future, but the tardiness of this process is holding back the recovery.""
According to the report, upward-bound sales across regions like the South and Midwest contrasted with dips in the Northwest and Northeast, alongside a steadily slacking condo sector and moderate stabilization in single-family home sales. Dropping 0.8 percent in June, totals for single-family town homes, condominiums, and coops crested at a seasonally adjusted rate of 4.77 million after plunging from 4.81 million in May. The totals linger at 8.8 percent below 5.23 million units since June ├â┬ó├óÔÇÜ┬¼├óÔé¼┼ô the scheduled closing deadline for the home buyer tax credit.
Across all housing sectors, the national median for existing-home prices emerged at $184,300 last month, striking upward at a rate of 8.0 percent. Selling at low discounts, foreclosures and short sales translated to signal a slight dip in sales to the tune of 30 percent, down from 31 percent in May and 32 percent in June.
According to the statement, 3.77 million existing homes went up for sale at the end of June, reflecting a 3.3 percent increase for a 9.5-month supply, a few percentage points above a 9.1 percent month supply last May.[COLUMN_BREAK]
""Home sales had been trending up without a tax stimulus, but a variety of issues are weighing on the market including an unusual spike in contract cancellations in the past month,"" said Lawrence Yun, ""NAR"":http://www.realtor.org/ chief economist. ""The underlying reason for elevated cancellations is unclear, but with problems including tight credit and low appraisals, 16 percent of ""NAR"":http://www.realtor.org/ members report a sales contract was canceled in June, up from 4 percent in May, which stands out in contrast with the pattern over the past year.""
""Pending home sales were down in April but up in May, so we may be seeing some of that mix in closed sales for June,"" Yun added. ""However, economic uncertainty and the federal budget debacle may be causing hesitation among some consumers or lenders.""
Walter Molony, a spokesperson for the ""NAR"":http://www.realtor.org/, offered up surprise over the pale trends for existing-home sales. ""We're surprised to see recent data because the consensus was we'd see a low-point in May,"" he says.
He attributes the bumpy road for contracts and existing-home sales to ""a lot of economic concerns,"" including sputtering job growth and fears over a default by the federal government on its debt. He tacks on low lending volume as another underlying reason.
""The single biggest problem right now is tight credit,"" Molony says. ""We normally expect to see stronger sales and we project that underwriting standards from a decade ago would put existing-home sales at 15 to 20 percent.""
He cites past lender behavior, such as due diligence, creditworthiness, and the willingness by lenders to consider more than credit scores. ""Lenders need to get back into the business of lending,"" he says.
Phipps added that ""[s]ome lenders are placing lower loan limits on current contracts in anticipation they may not close before the end of September. As a result, some contracts may be getting canceled because certain buyers are unwilling or unable to obtain a more costly jumbo mortgage.""
Adding to questions about home sales, on Monday ""Freddie Mac"":http://www.freddiemac.com/ released its monthly Economic and Housing Market Outlook, forecasting an upward trend in home sales that would send them above the figures for last year by as much as 3 to 5 percent. The ""NAR"":http://www.realtor.org/ statement coupled this data with other figures released by the mortgage giant, which posted 4.51 percent for 30-year conventional fixed-rate mortgages in June, a fall from 4.64 percent the month before.
According to its Web site, the ""NAR"":http://www.realtor.org/ represents 1.1 million realtors involved in the commercial and residential real estate industries.