WASHINGTON - Existing home sales fell 5.1% to a 5.37 million annual rate in June as home inventories increased, which could to push down prices in the months ahead, the National Association of Realtors reported today.
Home sales have declined in the post-tax credit housing environment. Lawrence Yun, the NAR’s chief economist, said he expected a lull of two months after the tax credit expired at the end of April. Now, he said he expects that lull in sales to continue for three to four months.
Economic uncertainty is “clouding” homebuying forecasts for the second half of 2010, Yun said.
Economists polled by Thomson Reuters expected 5.100 million existing home sales, according to the median estimate. Sales in May were unrevised at 5.660 million.
President Obama earlier this month signed a three-month extension to the deadline for closings under the home buyers’ tax credit. Buyers who qualified for the tax credit and signed a contract by April 30 now have until September 30 to close on the sale.
Yun said last month that as many as 180,000 homebuyers could have been affected by a backlog if the deadline was not extended.
The median existing home sale price increased 1.0% in June to $183,700 from one year ago. The median price increased 5.2% from May.
The inventory of existing homes for sale increased to 3.99 million homes and an 8.9 month supply, the highest level since August 2009. The months’ supply was 8.3 in May.
Yun said the inventory is likely to rise above 10 months’ supply in the upcoming months. A level of 10 months’ supply has traditionally pushed down home prices. The months’ supply was last above 10% in April 2009.
Yun said a short-term increase in the months’ supply, lasting two or three months, would not contribute to lower prices. But a sustained level of 10 months’ supply would push down prices.
Speaking before Congress on Wednesday, Federal Reserve chairman Ben Bernanke said: “The housing market remains weak, with the overhang of vacant or foreclosed houses weighing on home prices and construction.”
Bernanke said the Fed is “not prepared” to beginning selling its inventory of mortgage-backed securities “particularly since we're still also evaluating the recovery and strength of the recovery.”
