Home sales keep falling; supply at 11.1-month level

Home sales keep falling; supply at 11.1-month level
BY GRETA GUEST • FREE PRESS BUSINESS WRITER • July 25, 2008

Home sales continued to decline nationwide in June while inventory and foreclosures rose, according to reports issued Thursday.

Existing home sales fell by 2.6% in June to a seasonally adjusted annual rate of 4.86 million units from 4.99 million in May, the National Association of Realtors said. The sales pace was off 15.5% from June 2007.

Housing inventory at the end of June rose 0.2% to 4.49 million existing homes for sale, or an 11.1-month supply at the current pace. That's up from a 10.8-month supply in May.

Lawrence Yun, chief economist for NAR, said a first-time home buyer tax credit that the U.S. House passed on Wednesday would have a positive impact on the housing market as four of 10 homes are bought by first-time homebuyers.

In Michigan, sales of existing homes were down by 1.98% in June, according to the Michigan Association of Realtors. And the average price fell 13.23% to $121,611 in the state.

The national median existing home price was $215,000 in June, down 6.1% from a year ago. Foreclosures rose nearly 14% in the second quarter and jumped 121% from the second quarter of 2007, according to figures from RealtyTrac Inc. of Irvine, Calif.

Michigan had the seventh-highest foreclosure rate in the country with one filing for every 137 households. It ranked fifth in the quarter for the number of foreclosure filings with 32,868 including 5,114 notices of default, 12,526 notices of sale, and 15,228 bank repossessions, RealtyTrac said.

Michigan foreclosure filings rose by 11.25% from the first quarter and 73% from the second quarter of 2007, according to RealtyTrac figures.

Nevada, California and Arizona had the highest foreclosure rates in the second quarter.

James Saccacio, CEO of RealtyTrac, said bank repossessions accounted for 30% of the foreclosure activity in the second quarter. That means problem loans are being purged from the system, he said.

"Of course, if another surge in defaults occurs, which could well happen later this year, it would refill the foreclosure pipeline and prolong the recovery," Saccacio said.

Yun said there was a downward distortion in the national sales price data because short sales and foreclosures make up about a third of transactions, creating a drag on prices.