By Denny Gulino and Ian McKendry

WASHINGTON (MNI) – Sales of existing single-family homes, town
homes, condominiums and cooperatives fell 5.4% in June to a 4.37 million
annual rate, well below expectations and the apparent result of
extraneous factors, the National Association of Realtors reported
Thursday.

NAR Chief Economist Lawrence Yun told reporters he is not worried
that fundamental sales momentum is faltering despite the lowest reading
in eight months and he is sticking with a forecast for the year of 4.66
million existing units.

May’s results were revised up to a 4.62 mln rate from the original
4.55 million and June was the 12th straight year-over-year monthly
improvement, 4.5% above a year earlier. Sales for the first six months
of the year are 8% above the same period a year ago. Expectations in an
MNI survey had centered on a June sales rate of 4.65 million.

The inventory of homes on the market remained at a 6.6 months
supply in June, at 2.39 million.

Regionally, sales were down across the country, with the biggest
drop the 11.5% decline in the Northeast. The national median sales price
in June was $189,400, 7.9% above a year earlier.

Yun offered several factors he said could have depressed sales in
June, including that fact that with up to a two-month lag from indicated
pending sales, June’s result was just reflecting April’s lowest pending
sales level of the year that NAR reported earlier.

Beyond that, “it could also be new cases of where foreclosure
transactions are not clicking,” he said. While last year Realtors “were
frustrated with delays in short sales which were taking so long, now
we’re hearing foreclosure sales are being pulled at the last moment.”
Title firms, he said, seem to want to “dot every ‘i’ and cross every
‘t’, now at the last moment, due to potential legal liability.”

Those sales will go through eventually, he said. “We’re trying to
investigate a little more on that matter,” he said. The NAR has stopped
surveying realtors on the number of cancelled sales, which had been a
noticeable problem last year.

The category of sales that includes foreclosures, distressed sales,
appeared to hold steady in June at about 25% of the total, with
foreclosures 13% and short sales 12%.

Yun said realtors continue to report strong buyer interest and with
a 24% decline in inventory from last year and new housing starts only
half historical levels, “the country could potentially face a housing
shortage in a couple of years” if new construction doesn’t pick up.
“There is a pent-up demand out there.”

Sales of houses priced $100,000 or less continue to fall, he said,
and first-time buyers accounted for only 32% of all sales in June, down
from 34% in May and well down from what he said would be a “healthy
market share” of about 40%.

“Tight inventory in the lower price ranges, along with
unnecessarily tight credit standards, are holding back entry level
activity,” Yun said.

Yun also blamed a foreclosure sale failure rate as a reason for
some reports of a rebound in the number of properties retained by
lending institutions, the so-called shadow inventory. He said
foreclosure sale fails were being reported across the country, not only
in California — where a new Home Owner Bill of Rights law is moving
through the legislature.

Nevertheless, he said all indications are that the “longer term
trend is clearly declining shadow inventory.”

** MNI Washington Bureau: 202-371-2121 **

[TOPICS: M$$AG$,M$U$$$,MAUDS$]