RENEE MONTAGNE, host:
This morning, the Commerce Department said that sales of new homes fell 33 percent last month, to their lowest level on record. Some say this dismal news is the sign of things to come, now that the government's home buyer tax credit is no longer boosting the housing market. And the report is likely no surprise to many real estate agents they're all ready bracing for a tough summer.
NPR's Joshua Brockman reports.
JOSHUA BROCKMAN: Selma Jager has sold real estate for 38 years and has the trophies and plaques to prove it.
But it's hardly a trophy moment in Prince George's County, Maryland, which borders Washington, D.C. Jager says most of her listings have been sitting on the market for months.
Ms. SELMA JAGER (Realtor): I'm calling it a declining market. The prices from sellers' point of view are going down, dwindling, declining. And the buyers feel that the prices are too high. And that's the problem.
BROCKMAN: What's all that doing for your business?
Ms. JAGER: Tough. Tough. Tough.
BROCKMAN: This tough market is especially exasperating for realtors because home prices are the lowest they've been in ages. And interest rates are also at historic lows. In fact, mortgage payments on a median-price home fell below 20 percent of median household income. That's the lowest level in nearly 40 years, according to a recent report by Harvard's Joint Center for Housing Studies.
Nicolas Retsinas, the center's director, says the implosion of the housing market hurt many people, but first-time homebuyers have emerged as winners because owning a home is now within reach.
Mr. NICOLAS RETSINAS (Director, Harvard's Joint Center for Housing Studies): But now with prices falling back to levels that were last seen in the beginning of this decade, with interest rates at historic lows, if they have good credit - and that's a big if - owning a home now becomes an option.
Ms. JAGER: Just keep going straight ahead. You're going to stay on 450, okay?
BROCKMAN: Here in the Maryland suburbs, Selma Jager is giving me a tour of homes she's trying to sell. Our destination is a brick house on a quiet block. It's been on the market for nearly 280 days. So, in an effort to move things along, Selma Jager added this message to the for sale sign in the front lawn.
Ms. JAGER: I'm gorgeous inside.
(Soundbite of door opening)
Ms. JAGER: On this main level we have three bedrooms and two baths. So this is the hall bath.
BROCKMAN: The price started at $349,000. Then, they dropped it by $20,000. It may move lower still. That's because it's competing with many houses that banks now own and are trying to unload at rock-bottom prices.
Retsinas of Harvard says a third of all U.S. sales presently fall into this category of foreclosures and short sales.
Mr. RETSINAS: We're not going to have a sustainable housing market where such a large number of sales are distressed sales.
BROCKMAN: Selma Jager says at least two of her nine listings have been on the market for more than one year. So, to stay upbeat, she throws anniversary parties.
Ms. JAGER: At our weekly sales meeting I bring in cake and ice cream, just like you'd celebrate an anniversary. Unfortunately, it's not a happy celebration though, because that means I've had the house on the market for longer than a year.
BROCKMAN: One thing homebuyers can celebrate is low mortgage rates.
Keith Gumbinger, a mortgage analyst for HSH.com, says rates have benefitted from economic turmoil overseas as investors shifted money into the safety of U.S. Treasury bonds.
Mr. KEITH GUMBINGER (Mortgage analyst for HSH.com): Low and stable mortgage rates are providing important supports to the housing market. With the ending of the tax credit offer this spring, demand has fallen off to some degree.
BROCKMAN: He's referring to a federal tax credit that was intended to jump-start the housing market. But it ended in April. Homebuyers with a binding sales contract have until the end of June to complete the paperwork.
Realtors like Jager, hope that buyers will take the plunge this summer, even without the federal incentive.
Joshua Brockman, NPR News.