Existing Home Sales Fell in June

Updated: July 20, 2011 | 11:08 a.m.
July 20, 2011 | 10:13 a.m.

A house under foreclosure that will soon be auctioned in the Spring Valley area in Las Vegas on October 15, 2010. Foreclosures have evolved into a vast industry since the start of the economic crunch as Americans faced massive debts, with the number of mortgage defaults soaring from an annual average of one percent before 2008 to 10 percent today. In 2010, more than three million foreclosures were expected to take place in the United States, figures show, and documentation problems might exist in 80 percent of them. Las Vegas home prices continue to fall as the city continues to be among the worst performers in the Standard & Poor's/Case-Shiller Home Price report which covers the 20 biggest U.S. property markets. In the past year Las Vegas property prices fell 12 percent against the 20-city market average of a of 2.3 percent increase. AFP PHOTO/Mark RALSTON (Photo credit should read MARK RALSTON/AFP/Getty Images) (MARK RALSTON/AFP/Getty Images)

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.

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