Sales of previously owned homes drop 5.4 percent in June

Sales of previously owned homes nationwide dropped 5.4 percent in June from May's levels, results that one economist called a "bump in the road" to real estate market recovery.

The numbers were 4.5 percent higher than in June 2011, however, the National Association of Realtors reported Thursday.

Median prices rose 7.9 percent from June 2011, reflecting a drop in inventory and the availability of lower-priced distressed properties.

In fact, in some popular price ranges, sellers have received multiple bids. Still, local real estate agents emphasized, competition among buyers is not leading to windfalls for sellers, but more typically to sale prices at or slightly above asking.

"Despite the frictions related to obtaining mortgages, buyer interest remains solid," said Lawrence Yun, the Realtors group's chief economist. "But inventory continues to shrink, and that is limiting buying opportunities. This, in turn, is pushing up home prices in many markets."

Even where there is distressed housing for sale, buyers "realize the difficulty getting to settlement and the condition of properties," said Weichert Realtors agent Diane Williams in Blue Bell. "They want to settle quickly because of low interest rates."

Fixed rates for 30-year mortgages averaged 3.53 percent, Freddie Mac said Thursday, and have remained below 4 percent all but one week so far in 2012.

"Fixed mortgage rates are remaining low and helping to stir the housing market," said Freddie Mac chief economist Frank Nothaft.

IHS Global Insight economist Patrick Newport called the Realtors' report "weak" and "quite unexpected."

If investors are removed from the calculations — 19 percent of transactions in June were all-cash — "the drop in sales was even sharper than the reported one," Newport said.

First-time home buyers accounted for 32 percent of sales, "the lowest share this year, and a sign," he said, "that tight credit conditions were one culprit in June's weak sales figures."

Trulia.com chief economist Jed Kolko said sales remained just 35 percent of the way back to normal.

"The June sales level of 4.37 million [annualized] is much closer to the worst of the recession — 3.77?million in November 2008 — than to its long-term normal level of 5.5 million," Kolko said.

Looking at the year-over-year increase in median prices, Joel L. Naroff, of Naroff Economic Advisors in Holland, Bucks County, said they were "really beginning to firm."

"That is good news as it means equity is rising and people will have more money to spend if they want to move," Naroff said.

"Also, if it becomes clear that the bottom in prices has been reached, those who are on the fence will start jumping off, and that," he said, "will lead to rising sales."