Existing-home sales rose 2.4 percent to a seasonally adjusted annual rate of 4.77 million, according to the latest report by the National Association of Realtors
(NAR).
However, a key reason that pre-owned home sales rose was that the prices of homes are falling. The median sales price fell 16.8 percent in the past year to $173,000, the third-largest year-over-year decline on record.
Lawrence Yun, NAR chief economist, said, "Historically low mortgage interest rates clearly drew buyers into the market, and housing remains very affordable even with a recent uptick in rates. First-time buyers also are being drawn off the sidelines by the $8,000 tax credit, which is helping to absorb inventory. However, the increase in sales is less than expected because poor appraisals are stalling transactions. Pending home sales indicated much stronger activity, but some contracts are falling through from faulty valuations that keep buyers from getting a loan."
Yun said the appraisal problem poses a serious obstacle to recovery of the housing market.
"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."
Appraisals are also hurting commercial real estate markets, said Cory Sovine, assistant vice president of retail for Milwaukee-based Siegel-Gallagher Inc.
"Appraisers are so scared of over-valuing anything they are undercutting real estate values by 20-30 percent and sometimes more making it impossible for lenders to provide commitments," Sovine said.
