Canceled contracts cited in June dip in sales of existing homes

An unexpected surge in contract cancellations resulted in a 0.8 percent drop in U.S. sales of previously owned homes in June from May's level, the National Association of Realtors said Wednesday.

Sales nationwide were 8.8 percent below the level in June 2010, the deadline for closing transactions under the now-expired federal home-buyer tax credit, the Realtors group said.

In the eight-county Philadelphia region, sales rose 16.3 percent from May but were 31.9 percent below the June 2010 level, according to Prudential Fox & Roach's HomExpert Market Report.

The national median home price was $184,300 in June, up 0.8 percent from a year earlier. Distressed properties - foreclosures and short sales generally sold at deep discounts - accounted for 30 percent of June's sales, the Realtors association said, compared with 31 percent in May and 32 percent in June 2010.

Locally, June's median price was $225,000, up from $207,000 in May but down from $232,400 in June 2010.

Although sales in this region last month were 31.9 percent below a year earlier, they increased month to month during most of the spring market, which typically runs from mid-February to June 30. The increases were not consistent, though.

January, February, March, and half of April were good, "and then the lights went out in the end of April through the end of June, which is normally my busiest time," Center City real estate agent Laurie Phillips said.

The underlying reason for the elevated rate of contract cancellations across the country was unclear, "but with problems including tight credit and low appraisals, 16 percent of NAR members report a sales contract was canceled in June, up from 4 percent in May, which stands out in contrast with the pattern over the past year," said Lawrence Yun, chief economist for the Realtors association.

Of the national figures, economist Joel L. Naroff of Holland, Bucks County, said: "It's tough to turn around the housing market when equity has disappeared and mortgages are hard to get, and we keep seeing that fact month after month."

Local real estate agents say they aren't seeing many contract cancellations.

"For whatever reason, I've been seeing more buyers and investors willing to plop down cash, alleviating the need for the ever-challenging mortgage contingency" in the sales agreements, said John B. Badalamenti, an associate broker at Prudential Fox & Roach in Wayne.

Naroff said he couldn't explain the uptick in cancellations.

"The logical reason is tight credit, but by now you would think potential buyers and Realtors would do some pre-approval action to find out buyer capacity," he said, adding that he hoped it was only "a temporary phenomenon."