Tuesday June 23, 04:53 PM
US home sales higher for second month in row
WASHINGTON (AFP) - US existing home sales rose 2.4 percent in May, marking the first back-to-back monthly increase since 2005, an industry group said Tuesday in a sign the troubled sector was steadying.
The National Association of Realtors attributed the increase to "favorable affordability conditions and a first-time buyer tax credit" offered by the US government.
Sales rose to a seasonally adjusted annual pace of 4.77 million homes and apartments, NAR said.
The sales pace was below market expectations of an annualized 4.82 million but nonetheless was seen as a hopeful sign for the recession-ravaged economy.
"Housing continues to stabilize and it really does appear that the worst is finally behind us," said Joel Naroff at Naroff Economic Advisors.
"Housing led the downturn and we've been looking for some stability in this sector as a sign the recession is ending. Well, it appears those signals are getting stronger."
Others cautioned about reading too much into the report.
"Sales are stable but exceedingly low," said Celia Chen at Moody's Economy.com. "The NAR's inventory numbers likely understate the magnitude of the inventory overhang since many foreclosed units are not listed."
The Realtors group said total housing inventory at the end of May fell 3.5 percent to 3.80 million homes available for sale, which represents a 9.6-month supply at the current sales pace, down from a 10.1-month supply in April.
The sales rise of 2.4 percent followed a similar 2.4 percent increase in April, based on revised figures. But the May sales pace was down 3.6 percent from a year ago.
"Historically low mortgage interest rates clearly drew buyers into the market, and housing remains very affordable even with a recent uptick in rates," said Lawrence Yun, the NAR's chief economist.
"First-time buyers also are being drawn off the sidelines by the 8,000-dollar tax credit, which is helping to absorb inventory. However, the increase in sales is less than expected because poor appraisals are stalling transactions."
The national median existing home price for all housing types was 173,000 dollars in May, down 16.8 percent from a year earlier, but up from 166,600 a month earlier.
A large proportion of sales came from "distressed properties," although this declined to 33 percent of all sales in May from 45 percent in April.
NAR officials said this distorts the median price.
"The decline in the distressed sales share likely results from an increase of repeat buyers in May," Yun said.
"First-time buyers are concentrated in the lower price ranges, which include most of the distressed sales."
The NAR said single-family home sales rose 1.9 percent to a seasonally adjusted annual rate of 4.25 million in May.
Existing apartment sales including condominiums and co-ops increased 6.1 percent to a seasonally adjusted annual rate of 520,000 units.
Yun said the appraisal problem -- making it hard to get an estimate of a property's worth -- is holding back many sales.
"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."
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