Cancellations deflate existing-home sales

Existing-home sales dipped in June by 0.8%, to 4.77 million from 4.81 million in May, according to the National Association of Realtors (NAR). This figure remains 8.8% below the 5.23 million unit level in June 2010, which was the scheduled closing deadline for the home buyer tax credit, the organization noted. 

Sales gains in the Midwest and South were offset by declines in the Northeast and West. Single-family home sales were stable, while the condo sector weakened.

Lawrence Yun, NAR’s chief economist, said home sales had been trending up without the tax stimulus, but an unusual spike in contract cancellations this past month weighed on the market.  

“The underlying reason for elevated cancellations is unclear, but with problems including tight credit and low appraisals, 16% of NAR members report a sales contract was canceled in June, up from 4% in May, which stands out in contrast with the pattern over the past year.”

Yun cited other factors in the sales performance. “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. However, economic uncertainty and the federal budget debacle may be causing hesitation among some consumers or lenders.”

The national median existing-home price for single-family homes was $184,600 in June, up 0.6% from a year ago. The median existing condo price was $182,300 in June, up 1.8% from June 2010.

Distressed homes -- foreclosures and short sales generally sold at deep discounts -- accounted for 30% of sales in June, compared with 31% in May and 32% in June 2010. 

Total housing inventory at the end of June rose 3.3% to 3.77 million existing homes available for sale, which represents a 9.5-month supply at the current sales pace, up from a 9.1-month supply in May.

All-cash transactions accounted for 29% of sales in June; they were 30% in May and 24% in June 2010; investors account for the bulk of cash purchases. First-time buyers purchased 31% of existing homes in June, down from 36% in May; they were 43% in June 2010 when the tax credit was in place. 

Regionally, existing-home sales in the Northeast fell 5.2% to an annual pace of 730,000 in June and are 17.0% below June 2010. The median price in the Northeast was $261,000, up 3.1% from a year ago.

Existing-home sales in the Midwest rose 1.0% in June to a pace of 1.04 million but are 14.0%  below a year ago. The median price in the Midwest was $147,700, down 5.3% from June 2010.

In the South, existing-home sales increased 0.5% to an annual level of 1.86 million in June but are 5.6% below June 2010. The median price in the South was $159,100, down 0.1% from a year ago.

Existing-home sales in the West declined 1.7% to an annual pace of 1.14 million in June and are 2.6% below a year ago. The median price in the West was $240,400, up 9.5% from June 2010.