Existing home sales drop but there’s some good news on home prices

A spike in contract cancellations caused existing home sales to dip in June to 4.77 million units.

The Northeast saw the worst of the drop, falling by more than 5 percent, leaving existing home sales in the region 17 percent below a year ago.  Those losses were offset, however, by modest gains in the South and Midwest.

Condominium sales got walloped in the month, falling 7 percent, leaving them 18 percent below a year ago.  Single-family home sales were unchanged at a seasonally adjusted annual rate of 4.24 million in June.

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

Anecdotally, Realtors have reported contract cancellations due to home inspections as buyers are less willing to accept homes in need of repair.  It’s unknown if that has affected the national trend but locally agents say it is a factor.

Total housing inventory at the end of June rose 3.3 percent 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.

Home values were on the rise last month with the median existing-home price for all housing types at $184,300, up 0.8 percent from June 2010.

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

Existing home sales drop but there’s some good news on home prices