Existing Home Sales Unchanged in the South

Distressed properties, Existing Home Sales, First Time Home Buyer

Existing home sales for May came in at an annualized rate of 4.77 million units, which is slightly below the rate of 4.82 million units that was widely forecast. May sales also mark the highest annualized sales rate since October’s rate of 4.94 million units.

Given that data for April was revised moderately lower to reflect an annualized rate of 4.66 million units, sales for May reflect a month-over-month increase of 2.4%, which is below the 3.0% increase that was widely expected.

In the South, existing home sales were unchanged at an annual pace of 1.74 million in May but are 8.9 percent below a year ago.

Distressed properties, which declined to 33 percent of all sales in May from 45 percent in April, continue to downwardly distort the median price because they generally sell at a discount relative to traditional homes.

Given that the first time home buyers make up the bulk of the distressed properties sales, this is a clear indication that they are running out of steam. Unless Uncle Sam comes out with a new or extends the current tax credit, in a few months first time home buyers will lose their incentives for buying. Which could lead to a slower house market recovery.

Lawrence Yun, Chief Economist and Senior Vice President of Research at the NATIONAL ASSOCIATION OF REALTORS® noted that;

“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.”

This is not surprising given the current state the lenders are facing. For those who are currently in the market to buy a home be aware of this issue. Contact several appraisers, your Realtor should have a several appraisers they can recommend.

Make sure the appraiser is a member of the Appraisal Institute with the designation SRA or MAI behind his or her name. This assures that the appraiser has met rigorous standards and has completed in-depth training and education.

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