Sales of existing homes showed another gain in May, benefiting from favorable affordability conditions and the first-time buyer tax credit, according to the ""latest report"":http://www.realtor.org/research/research/ehsdata from the ""National Association of Realtors"":http://www.realtor.org. May’s increase was the first back-to-back monthly gain since September 2005.
Existing-home sales - including single-family, townhomes, condominiums and co-ops - rose 2.4 percent to an annual rate of 4.77 million units in May. That figure is up from April's level of 4.66 million units, but remains 3.6 percent below the 4.95 million-unit pace in May 2008.
Lawrence Yun, NAR chief economist, said he expected to see the numbers improve. ""Historically low mortgage interest rates clearly drew buyers into the market, and housing remains very affordable even with a recent uptick in rates,"" Yun said. ""First-time buyers also are being drawn off the sidelines by the $8,000 tax credit, which is helping to absorb inventory.""
According to NAR, total housing inventory at the end of May fell 3.5 percent to 3.80 million existing homes available for sale. This represents a 9.6-month supply at the current sales pace, down from a 10.1-month supply in April.
Yun says, though, that the increase in sales was less than expected because poor appraisals are stalling transactions. ""Pending home sales indicated much stronger activity, but some contracts are falling through from faulty valuations that keep buyers from getting a loan,"" he said.
Yun contends that the appraisal problem is a serious one. ""Lenders are using appraisers who may not be familiar with a neighborhood, or who compare traditional homes with distressed and discounted sales,"" he said. ""In the past month, stories of appraisal problems have been snowballing from across the country with many contracts falling through at the last moment. There is danger of a delayed housing market recovery and a further rise in foreclosures if the appraisal problems are not quickly corrected.""
Based on ""NAR's study"":http://www.realtor.org/research/research/ehsdata, the national median existing-home price for all housing types in May was $173,000, down 16.8 percent from a year earlier. Distressed properties, which declined to 33 percent of all sales in May from 45 percent in April, continue to downwardly distort the median price because, NAR said in its report.
""The decline in the distressed sales share likely results from an increase of repeat buyers in May,"" Yun said. ""First-time buyers are concentrated in the lower price ranges, which include most of the distressed sales.""
An NAR practitioner survey in May showed first-time buyers accounted for 29 percent of transactions nationwide, and that the number of buyers looking at homes is nearly 10 percentage points higher than a year ago.
According to NAR's market data, single-family home sales across the country rose 1.9 percent to a seasonally adjusted annual rate of 4.25 million in May, up from a pace of 4.17 million in April. The median existing single-family home price was $172,900 in May, down 16.1 percent from a year ago.
Existing condominium and co-op sales increased 6.1 percent to a seasonally adjusted annual rate of 520,000 units in May, up from 490,000 in April. The median existing condo price was $173,800 in May, down 21.9 percent from a year earlier.
Regionally, existing-home sales in the Northeast rose 3.9 percent to an annual level of 800,000 in May. The median price in the Northeast was $243,600, which is 12.5 percent below May 2008.
Existing-home sales in the Midwest jumped 9.0 percent in May to a pace of 1.09 million units for the year. The median price in the Midwest was $145,800, which is 10.4 percent lower than a year ago.
In the South, existing-home sales were unchanged at an annual pace of 1.74 million in May. The median price in the South was $157,400, down 9.9 percent from May 2008.
Existing-home sales in the West slipped 0.9 percent to an annual rate of 1.14 million in May. The median price in the West was $197,700, down 30.6 percent from a year ago.