Pending home sales inch up in May

An index tracking pending sales of existing homes inched up a barely perceptible 0.1 percent from April to May, but it marked the first time the index has posted four consecutive monthly gains since October 2004, the National Association of Realtors said today.

At 90.7, the Pending Home Sales Index was up 6.7 percent from a year ago. An index of 100 is equal to the average level of contract activity during 2001, the year NAR launched the index and the first of five consecutive record years of existing-home sales.

The index posted the strongest monthly gain in the Northeast, rising 3.1 percent to 80.9, up 6.8 percent from a year ago. The West also saw a 2.2 percent increase in the index from April to May, to 96.9, down 0.7 percent from a year ago.

The index slipped 1.7 percent in the South from April to May, to 92.6, which is a 7.9 percent gain from a year ago. The Midwest saw a 1.3 percent monthly drop, to 89.2, up 11.4 percent from a year ago.

Some contracts signed in May might not close in the weeks ahead because new rules for appraisals are delaying or derailing transactions, NAR Chief Economist Lawrence Yun said.

The appraisal rules, which went into effect May 1 and apply only to loans to be purchased or guaranteed by Fannie Mae and Freddie Mac, are intended to protect appraisers from coercion.

NAR claims the rules have led to an increased reliance on appraisal management firms, which in some cases are using appraisers who are unfamiliar with a neighborhood or using distressed and discounted properties as comparable sales for nondistressed homes.

A spokesman for a trade association representing appraisers, the Appraisal Institute, has said falling home prices, not appraisers, are the reason appraisals are coming in lower than sales price in some markets (see story).

Rep. Travis Childers, D-Miss., and Rep. Gary Miller, D-Calif., are sponsoring a bill, HR 3044, that would grant NAR's request for an 18-month moratorium on implementation of the appraisal rules, known as the Home Valuation Code of Conduct. The bill, introduced June 25, has been referred to the House Committee on Financial Services (see story). ...CONTINUED

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