RE/MAX Faults Lenders, Appraisals

Strict lending standards, bad appraisals and concern about the economy all contributed to lower than normal sales in July.

RE/MAX reported that after rising for two straight months, home sales fell 12.7 percent in July when compared with sales in June, following a traditional summer trend.

However, for the first time in six months, sales were higher than one year ago, up an impressive 13.1 percent from July 2010 when sales plunged following the expiration of the homebuyer tax credits.

The July 2011 RE/MAX National Housing Report, which surveyed 53 U.S. metropolitan areas, shows signs of a continuing, but uneven, recovery in the housing market. RE/MAX blamed appraisals and lenders for the decline, noting that many lenders are already using the lower GSE and FHA loan limits set to take effect on September 30.

“The fact that July home sales were higher than a year ago, and by such a significant amount, gives us reason for great optimism,” said Margaret Kelly, CEO of RE/MAX, LLC. “And now that prices have risen for four of the past five months, the housing market is beginning to show definite signs of recovery.”

In the last 12 months, only January and July had Home Sales higher than the previous year. January was up fractionally and July was up a solid 13.1% from July 2010. Both investors and traditional home buyers became a little more skittish about the economy in July, perhaps due to the Debt Ceiling debate. Traditionally, June sales are the highest of the year, with a slight drop in July. Overall, sales were 12.7% lower in July than in June. However, 45 metro areas experienced more sales than in July of last year. Some of those leading their 2010 sales numbers include: Des Moines, IA +49.9 percent, Omaha, NE +46.8 percent, Milwaukee, WI +37.7 percent, Providence, RI +32.4 percent and Wichita, KS +29.0 percent.

The July 2011 RE/MAX National Housing Report shows that Home Prices in July were just 0.18 percent lower than in June, while the year-over-year decrease of 4.6% is the smallest the survey has recorded in 6 months. On a monthly basis, prices have now risen for four of the past five months. There were 11 metro areas that recorded higher prices in July than in the same month last year, most notably: Detroit +14.3 percent, Birmingham, AL +9.8 percent, Des Moines, IA +7.7 percent, Orlando, FL +5.5 percent and Pittsburgh, PA +4.4 percent.

The average Days on Market for homes sold in July was 88, down just two days from the June level. July marks the first month since September 2010 that the Days on Market figure has been below 90. The July average is identical to September 2010, when the average Days on Market was also 88. Days on Market is the average number of days from listing to receipt of a signed contract.

Perhaps due to fewer foreclosure properties coming on the market, the 53 metro areas surveyed in the July 2011 RE/MAX National Housing Report had an average Months Supply of Inventory of 7.2, which is up slightly from the 6.9 mark registered in June, but down significantly from the 9.3 mark seen in July 2010. Overall inventory continued a 13-month trend to lower levels. Inventories were 5.3% lower in July from June, and down 17.1 percent from July 2010. The Florida markets continue to see the largest annual drop in inventory: Miami, FL -52.5%, Tampa, FL -37.3 percent, Phoenix, AZ -35.6 percent, Los Angeles, CA -32.4 percent and Chicago, IL -26.9 percent.