Existing-home prices rise in June but sales drop

Numbers released today by the National Association of Realtors (NAR) showed continued gains in-existing home prices but a slower market for sales. Completed transactions that include single-family homes, townhomes, condominiums and co-ops declined 5.4% in June compared with May. In year-over-year figures, June 2012 was 4.5% higher than June 2011.

The national median existing-home price for all housing types was $189,400 in June, up 7.9% from a year ago. This marks four back-to-back monthly price increases from a year earlier, which last occurred in February to May of 2006. June's gain was the strongest since February 2006 when the median price rose 8.7% from a year prior.

NAR chief economist Lawrence Yun said the bigger story is lower inventory and the recovery in home prices. "Despite the frictions related to obtaining mortgages, buyer interest remains solid. But inventory continues to shrink and that is limiting buying opportunities. This, in turn, is pushing up home prices in many markets," Yun said. "The price improvement also results from fewer distressed homes in the sales mix."

Distressed homes -- foreclosures and short sales sold at deep discounts -- accounted for 25% of June sales (13% were foreclosures and 12% were short sales), unchanged from May but down from 30% from June 2011. Foreclosures sold for an average discount of 18% below market value in June, while short sales were discounted 15%. "The distressed portion of the market will further diminish because the number of seriously delinquent mortgages has been falling," said Yun.

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