Stephanie Armour
USA Today
The National Association of Realtors says sales of previously occupied homes rose 3.6% from May to June, the third consecutive monthly increase and a sign that a housing recovery is underway in much of the country. — By Jeff Chiu, AP
Home sales rose for the third-consecutive month in June, a promising sign that stability in the housing market could help jump-start the economy.
Home sales last month rose 3.6% to a seasonally adjusted annual rate of 4.89 million properties with gains seen in all major regions of the USA, according to a Thursday report by the National Association of Realtors (NAR).
But overall home prices continued to slide. The median price on existing homes in June was $181,800, down 15.4% from June 2008.
“The numbers are encouraging and show some stability,” says Bernard Baumohl at the Economic Outlook Group. “Given that the economic crisis all began with the collapse in the housing market, it’s encouraging to see this sector starting to improve.”
The inventory of homes for sale also dropped, meaning there is less of a glut on the market. Total housing inventory in June represented a 9.4-month supply at the current sales rate, down from 9.8 months in May. Compared with a year ago, the number of homes on the market is down 15%.
Federal Reserve Chairman Ben Bernanke also said recently that the housing crisis seemed to be moderating.
Home prices are being dragged down by the large number of distressed homes for sale. Distressed sales — which include sales of foreclosed homes — accounted for about a third of sales in the second quarter. About 30% of sales in June were distressed sales, down from about 50% through March of this year.
First-time buyers in June accounted for 29% of transactions, unchanged from May, according to a separate survey by NAR. Patrick Newport, an economist at IHS Global Insight, says that it’s too soon to say the market for homes is turning around. The economy is still shedding jobs, credit is tight, and a tax credit of up to $8,000 for first-time home buyers that has boosted sales will expire at the end of November.
Rates also are inching up. The 30-year fixed-rate mortgage averaged 5.20% for the week ended July 23, up from last week when it averaged 5.14%, according to Freddie Mac.
“Sales will sag until the labor market turns around. This will not happen until next year,” Newport said in a statement.
And foreclosures are continuing to mount. June marked the fourth-consecutive month that foreclosure filings surpassed 300,000, according to RealtyTrac. A total of 1.9 million foreclosure filings were reported in the first half of this year, up 15% from the first six months of 2008.
Also on Thursday, the Federal Reserve proposed changes in mortgage broker commissions. The changes would no longer let brokers earn greater compensation when offering pricier loans.