WASHINGTON (MarketWatch) -- Resales of U.S. homes fell 5.1% in June to a seasonally adjusted annual rate of 5.37 million as a federal subsidy for home buyers wound down, the National Association of Realtors estimated Thursday.
Sales that closed in June were eligible for the federal tax credit, and the credit could cover a few more sales through the end of September if the closing was significantly delayed. To qualify, a buyer had to sign a sales contract by the end of April.
"With housing demand pulled forward and current indicators lackluster, it is likely house sales and house construction will remain weak over the remainder of the summer," wrote Kurt Rankin, an economist for PNC.
Sales were at the lowest seasonally adjusted level since March, but higher than the 5.10 million annual pace expected by economists surveyed by MarketWatch.
Inventories of unsold homes increased 2.5% to 3.99 million in June, representing an 8.9-month supply, the highest since August 2009.
In coming months, the supply is expected to rise above 10 months, putting downward pressure on prices, said Lawrence Yun, chief economist for the real estate agents' lobbying and advocacy organization.
If inventories remain "very high" over many months, prices could fall further, Yun said. Prices have already overcorrected, so further declines should be modest, he said.
The median sales price rose 1% in the past year to $183,700 in June, the NAR said. Prices through the first six months of the year are essentially unchanged from the first six months of 2009.
In a separate report, the Federal Housing Finance Agency said its price index of repeat sales rose 0.5% in May compared with April. National home prices were down 1.2% compared with a year earlier, FHFA said.
"It's only a matter of time" before the double dip in sales leads to a double dip in prices, said Brian Levitt, an economist with OppenheimerFunds.
That would put more pressure on households and banks. "The biggest asset for most people has become their biggest liability," Levitt said.
Economic uncertainty is clouding the outlook for the market, Yun said. Fundamentals are now paramount: Job growth, income growth, interest rates, home prices and household formation. Rates for a 30-year fixed mortgage were at a record low 4.74% in June.
Sales are expected to pause for three to four months following the tax credit, the NAR economist said. "Only when jobs are created at a sufficient pace will home sales return to sustainable healthy levels," Yun said.
The government has been supporting sales and home prices for more than two years, providing up to $8,000 to qualified buyers. But the tax credit has essentially ended. To qualify, a buyer must have signed a sales contract by April, and must close the sale by Sept. 30, an extension from the original June 30 deadline.
The NAR data on existing-home sales are based on closings, which usually occur a month or two after the sales contract is signed. Sales contracts fell about 30% in May.
Most economists believe the tax credit pulled forward sales that would have taken place later. Sales of existing homes surged last fall with the first tax credit and are up 9.8% compared with a year ago.
The expiration of the tax credit has devastated the housing market. Housing starts fell 19% combined in May and June. New-home sales plunged 33% in May.
- Sales of single-family homes fell 5.6% in June, while sales of condos dropped 1.5%.
- Sales fell in three of four regions: Sales fell 9.3% in the West, 7.5% in the Midwest and 6.5% in the South. Sales rose 7.9% in the Northeast.
- Distressed sales accounted for 32% of sales, little changed from recent months. The mix of distressed sales has shifted, however, with fewer foreclosures and more short sales, the NAR said.
- First-time buyers bought 43% of the homes in June, down from 46% in May. All-cash buyers accounted for 24% of sales, compared with 25% in May. Investors bought 13% of homes.
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