Pending home sales rise in June, but below year-ago

Pending sales of existing houses nationwide rose slightly in June from May, but they remain 12.3 percent below the level of June 2007, the National Association of Realtors reported yesterday.

In the Philadelphia region, pending sales - those for which agreements were signed in June but will close in 30 to 90 days - were unchanged from May but about 22 percent lower than June 2007, according to Prudential Fox & Roach's HomExpert Report, based on data from Trend Multiple Listing Service.

"The market is continuing to favor first-time home buyers," said Steve Storti, senior vice president of marketing for Prudential Fox & Roach.

The increase nationally in June was 5.3 percent from May.

NAR chief economist Lawrence Yun said, "Sales have been in a pattern of rising and falling within a fairly narrow range." The fact that all four regions of the country showed gains was welcome "because higher sales-contract activity is necessary for overall recovery."

The best month-to-month showings were in the South and West, where sales of foreclosed houses are concentrated, the NAR reported.

The Northeast, with fewer foreclosures and comparatively smaller median sales-price declines since the housing slump began, had a smaller monthly pending-sales gain and larger year-over-year drop.

Three markets in which the NAR reported stronger sales in recent months and "greater affordability" were Sacramento, Calif.; Las Vegas; and Fort Myers, Fla., all of which have some of the highest foreclosure rates and largest price declines in the country.

"Foreclosure sales undoubtedly are a significant aspect of the improvement," said Joel L. Naroff, chief economist of Commerce Bancorp Inc., of Cherry Hill. "It is making lots of homes affordable to buyers who have the credit and money but not a lot of income."

"Everything taken together, I believe we have bottomed when it comes to existing home sales," Naroff said.

Global Insight Inc. housing economist Patrick Newport said he believed the sales slide that began in 2007 would resume later this year.

"Sales have leveled off recently, because banks have been slashing prices on foreclosed homes," he said. "This will continue, since foreclosures are still rising."

This is true, even though fixed interest rates remain at 6.52 percent, lower than a year ago, Freddie Mac reported. The Mortgage Bankers Association, however, said that applications for home purchases fell this week to the slowest pace since the week ending Feb. 21, 2003.

"The housing market is continuing to act as a drag on the economy," said Frank Nothaft, Freddie Mac chief economist.

The industry hopes provisions of the Housing and Economic Recovery Act - higher mortgage limits, FHA loan-program enhancements and the first-time buyer tax credit - will help boost home sales.

"How much the housing bill will add to this is unclear, but it has to help," Naroff said.