Home purchase contract cancellations spiked in June, prompting existing-home sales to drop 0.8% to a seasonally adjusted rate of 4.77 million, the National Association of Realtors (NAR) reports.
Home prices, however, stabilized, with the national median existing-home price rising 0.8% from June 2010 to $184,300. The share of distressed sales fell from 31% in May to 30% last month.
NAR also reports that sales gains in the Midwest and South were offset by declines in the Northeast and West. Single-family home sales were unchanged at an adjusted annual rate of 4.24 million in June. Condo sales weakened, falling 7% month over month.
"Home sales had been trending up without a tax stimulus, but a variety of issues are weighing on the market, including an unusual spike in contract cancellations in the past month," says Lawrence Yun, NAR's chief economist. "The underlying reason for elevated cancellations is 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 four percent in May, which stands out in contrast with the pattern over the past year."
Yun cites other factors in the sales performance. "Pending home sales were down in April but up in May, so we may be seeing some of that mix in closed sales for June," he says. "However, economic uncertainty and the federal budget debacle may be causing hesitation among some consumers or lenders."
Ron Phipps, NAR's president, says the lower mortgage loan limits, which are set to take effect Oct. 1, are already having an impact.
"Some lenders are placing lower loan limits on current contracts in anticipation they may not close before the end of September," Phipps says. "As a result, some contracts may be getting canceled because certain buyers are unwilling or unable to obtain a more costly jumbo mortgage."
The total housing inventory at the end of June rose 3.3% to 3.77 million existing homes available for sale, which represents a 9.5-month supply at the current sales pace.
The percentages of both all-cash sales and existing homes being sold to first-time buyers fell in June.