May Existing Homes Sales See Monthly Uptick But Down From Last Year, Realtors Warn About Appraisals
Data today from the National Association of Realtors showed that sales of existing homes in May rose 2.4% to a seasonally adjusted annual rate of 4.77 million from a downwardly revised level of 4.66 million units in April, but remained 3.6 percent below the 4.95 million-unit pace in May 2008.
NAR chief economist, Lawrence Yun, said housing remains very affordable and first-time buyers are being drawn off the sidelines by the $8,000 tax credit, but also said poor appraisals are stalling
transactions. Yun said, "Pending home sales indicated much stronger activity, but some contracts are falling through from faulty valuations that keep buyers from getting a loan."
Elaborating on the "serious" home appraisal problem, Yun said "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."
The national median existing-home price for all housing types was $173,000 in May, down 16.8 percent from a year earlier. Distressed properties declined to 33% of all sales in May from 45% in April.
Related ETFs: SPDR S&P Homebuilders (NYSE: XHB)
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