Existing home sales unexpectedly dropped in June, according to data released by the National Association of Realtors on Wednesday.
Economists surveyed by Bloomberg expected an increase to 4.9 million sales at a seasonally adjusted annual rate. Instead, the total declined 0.8 percent from 4.81 million in May to 4.77 million. That’s 8.8 percent below the 5.23 million sales in June 2010.
An unexpected spike in contract cancellations was behind the drop, according to the association. Lawrence Yun, NAR chief economist, said in a statement that the reason for the increase was “unclear” but tight credit and low home appraisals may have contributed.
“With record high housing affordability conditions thus far in 2011, we’d normally expect to see stronger home sales," NAR President Ron Phipps said, citing “excessively tight” loan standards that discouraged buyers from completing deals.
Continued high unemployment and low consumer confidence also make Americans less likely to purchase homes. Yun noted that economic uncertainty and the unresolved budget negotiations in Washington may be causing consumers to hesitate rather than buy.
A bright spot: home prices were up 0.8 percent from June 2010 and the percentage of distressed homes, including foreclosures and short sales, as part of total sales fell to 30 percent, down 1 percent from May.
Construction on new homes hit a five-month high in June, according to data released Tuesday by the Commerce Department.