Home resales rose again in May, the first back-to-back monthly gain since September 2005 due to historically low mortgage rates and a first-time buyer tax credit, the National Association of Realtors reported on Tuesday.
The existing home sales figures – which include single-family, townhomes, condominiums and co-ops – rose 2.4 percent to seasonally adjusted annual rate of 4.77 million units in May, compared with 4.95 million units sold a year earlier. The association downwardly revised April’s results to 4.66 million units.
The NAR’s chief economist, Lawrence Yun said in a released statement that low mortgage interest rates drew buyers into the market, as well as an $8,000 tax credit.
“[T]he increase in sales is less than expected because poor appraisals are stalling transactions,” Yun said. “Pending home sales indicated much stronger activity, but some contracts are falling through from faulty valuations that keep buyers from getting a loan.
The average commitment rate for May was 4.86 percent, up slightly from a record low of 4.81 percent in April, according to mortgage finance company Freddie Mac.
Yun warned of an “appraisal problem.”
Lenders are using appraisers who may not be familiar with a neighborhood, or who compare traditional homes with distressed and discounted sales,” he said.
“In the past month, stories of appraisal problems have been snowballing from across the country with many contracts falling through at the last moment. There is danger of a delayed housing market recovery and a further rise in foreclosures if the appraisal problems are not quickly corrected.”