Story first appeared in USA TODAY.
Home sales slipped in June to the lowest in seven months as the U.S. housing market struggles to find traction.
Sales of existing homes, including single-family homes, condominiums and townhouses, dropped 0.8% in June from May and 8.8% below June last year, when sales were boosted by federal tax credits.
The results were worse than forecast, underscoring that a variety of factors are weighing on the market, including the recent deterioration in the pace of the U.S. economic recovery.
In June, 16% of Realtors said they had home sale contracts canceled, up from 4% in May. The reason for so many cancellations remains a mystery, says an economist. But he says that tight credit conditions and low appraisals — both of which can kill home sale deals — are prime culprits. Concerns about Washington's standoff over the federal debt ceiling may also be causing hesitation among some consumers and lenders.
Despite the slowdown in sales in June, the median price edged up to $184,300. That's up 0.8% from a year earlier. Median prices fell in the South and Midwest, but rose 3.1% year over year in the Northeast and 9.5% in the West.
Those increases may have more to do with the mix of homes selling than with any sustained rebound in prices, Newport says.
Median prices rise if higher-priced home sales make up more of the sales. That may be occurring if those buyers are locking in deals to get the best mortgage rates.
As of October, the size of loans that government-backed mortgage giants Freddie Mac and Fannie Mae can buy from lenders is expected to drop in many higher-priced regions. That may make bigger loans more expensive and harder to get.
The coming change is already affecting some sales contracts, the NAR says. Some lenders are enforcing the lower loan limits now, anticipating that deals may not close before Oct. 1, the association says.
Most U.S. economists expect home prices, down 30% from their 2006 peak, to continue to fall this year and perhaps next.