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The rate of existing home sales fell in June, down 5.1 percent from May. That's according to a report released today. It is just the latest piece of bad news on the housing front. Even with record-low mortgage rates, new-home construction is also down, as are permits for single-family homes.
As NPR's Carolyn Beeler reports, local housing markets are struggling to recover from a post-tax credit hangover.
CAROLYN BEELER: New-home sales picked up earlier this year. Buyers rushed to close deals before the first-time buyer tax credit expired April 30th.
Kevin Lisota is a real estate broker in Seattle. He says he was working most weekends this spring. He was out showing buyers new properties. But as the expiration date for the tax credit drew near, that extra business dried up.
Mr. KEVIN LISOTA (Real Estate Broker): Basically, new clients coming in the door decreased. And then when May 1st hit, the number of people actually writing offers decreased dramatically. And we'll see the result of that in closed sales. We saw some of it last month. We'll see a lot of it this month.
BEELER: Lisota saw offers drop by almost half from April to May. It takes about a month for him to close a sale after an offer has been made, so June sales numbers are the first to start reflecting that drop-off.
Another problem that continues this summer is that some sellers are still thinking about the value of their homes in terms of what they paid for them years ago, when times were better. And that makes them sit on the market longer.
Mr. LISOTA: Are there sellers out there that are still overpricing their homes or hoping that they'll get more? Yes, those sellers are definitely still out there. And I think they're coming to a realization on what price they'll actually get - relatively slow, in some cases.
BEELER: In many markets across the country, prices are still falling and foreclosures are on the rise, flooding the market with a surplus of cheap houses. Some economists worry that house values will fall below 2009 crash levels again. Others are slightly more optimistic. Mark Zandi is the chief economist at Moody's Analytics. He says he thinks the very worst of the crash is over. He expects selling conditions to be quote, measurably better by the spring of 2012, as people who held off buying for so long finally take the plunge.
Mr. MARK ZANDI (Chief Economist, Moody's Analytics): I think the fundamentals of the economy, they're still not where we need them to be, but they're a long way from where they were.
BEELER: Zandi says federal programs like the tax credit were necessary to pull America out of the housing crash. But now, they're actually slowing down recovery.
Mr. ZANDI: Many potential homebuyers are sitting on the sidelines because they think, perhaps, we'll get another tax credit, so they're waiting to see. Assuming that we don't - and they become convinced of that soon - then I expect that we should see some better sales numbers.
BEELER: Lucien Salvant is with the National Association of Realtors. He says consumers shouldn't expect another tax credit. It's time for the housing market to fend for itself.
Mr. LUCIEN SALVANT (Managing Director of Public Affairs, National Association of Realtors): We are not seeking another tax break. What we feel is that we've had several tax credits in the past year and a half. They've done what they're supposed to do, which is to bring buyers back into the market. Now, we need to see if the housing market can stand on its own two feet and perform on its own.
BEELER: For the market to do that, most industry experts agree that interest rates must remain low, foreclosures have to slow down and most importantly, says Salvant:
Mr. SALVANT: Jobs, jobs and jobs.
BEELER: And Mark Zandi:
Mr. ZANDI: Jobs. I mean, I think we need jobs.
BEELER: And Kevin Lisota:
Mr. LISOTA: The most important thing to recovery in the housing market is truer recovery in the employment market.
BEELER: When that employment recovery begins in earnest, though, is anyone's guess.
Carolyn Beeler, NPR News, Washington.
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