Existing Home Sales Up for Third Straight Month

Sales of existing homes rose for the third month in a row in June, the first time that's happened in five years, according to survey data released today by the National Association of Realtors.

Sales of single-family homes, townhouses, condo and co-ops, excluding new construction, rose 3.6 percent for the month, slightly exceeding economist's expectations. Total sales were at a seasonally-adjusted annual rate of 4.89 million units, up from a revised rate of 4.72 million in May and only 0.2 percent below the June 2008 rate of 4.90 million units.

NAR chief economist Lawrence Yun said the trend bodes well for a continuing recovery of the housing market.

"The increase in existing-home sales occurred in all major regions of the country," said Lawrence Yun, NAR chief economist. "We expect a gradual uptrend in sales to continue due to tax credit incentives and historically high affordability conditions."

Prices slowly recovering

Median home prices were up for the second month in a row, reaching $181,000, though remaining nearly 16 percent below their June 2008 level of 215,000. Home prices in the survey have generally been slowly recovering since January, when they hit a low of $164,800. Sales of distressed/foreclosed properties, which tend to depress prices overall, made up 31 percent of all sales in June, down from approximately 50 percent earlier this year, according to Yun.

New home buyers made up 29 percent of all purchases, the NAR reported, with the $8,000 tax credit a key motivation. However, the window of opportunity for taking advantage of that credit is closing faster than buyers may realize, warned NAR President Charles McMilllan, particularly given current challenges in obtaining financing.

"Despite some of the challenges, the housing market continues to demonstrate signs of recovery," he said. "The temporary first-time buyer tax credit is clearly helping people make a decision and is contributing to the overall stimulus impact, but since it's taking longer to close transactions, many would-be beneficiaries may not be able to take advantage of the credit before the December 1 expiration date.

Housing inventory shrinks slightly

The total number of existing homes available for sale declined 0.7 percent in June, to 3.82 million units, representing a 9.4 month supply. Yun said that if that trend continues, housing price could stabilize later this year.

The increase in existing home sales was spurred by a 14 percent jump in condominium and co-op sales, which hit a seasonally adjusted total of 570,000 in June, up fro 500,000 the month before. Single-family home sales rose a modest 2.4 percent, to an adjusted rate of 4.32 million, but that was enough to put it 0.2 percent above the 4.31 million-unit rate of June 2008.

The NAR reported that sales have been concentrated in the lower end of the market, where many of the foreclosures have been. The combination of discounted pricing on foreclosed homes and a higher percentage of sales in the lower end of the market exert significant downward pressure on median sales prices.

Sales in West ahead of last year

Of the four major U.S. regions, existing home sales were up most strongly in the West, showing an increase of 6.4 percent from May and 11.5 percent from June 2008, the only region to show a gain over one year ago. The weakest monthly performance was in the Midwest, were sale were up 0.9 percent from May.

Pricewise, the Western region continued to show the weakest performance, with median sales prices down almost 25 percent from one year ago. In the other regions, median sales prices were down 12 percent in the South, 9 percent in the Midwest and 6 percent in the Northeast compared to June 2008.