Existing home sales fall in July, low appraisals plague market

Sales of existing homes fell nationwide in July, according to data from the National Association of Realtors released today, as tight lending and low appraisals — measures overcompensating for conditions that led to the boom — continue to plague the market.

The seasonally adjusted annual rate of existing sales of single-family, townhomes, condominiums and co-ops fell 3.5 percent in July to 4.67 million. However that rate remains 21 percent greater than the 3.86 million pace from last July. The median price fell 4.4 percent from the same month a year ago to $174,000, with distressed properties accounting for 29 percent of the sales.

Sixteen percent of NAR brokers reported contract cancellations in July, the same number as in June; 9 percent attributed it to low appraisals and another 13 percent reported renegotiated contracts due to low appraisals.

“Beyond the tight credit problems, all appraisals must be done by valuators with local expertise and using reasonable comparisons,” said NAR President Ron Phipps, a Rhode Island broker. “It doesn’t make sense to consistently see so many valuations coming in below negotiated prices, often below replacement construction costs.”

Regionally, home sales increased in the Northeast and Midwest, but fell in the South and West. — Adam Fusfeld