Sales of newly-constructed single-family homes rebounded 11 percent from May to June, to a seasonally adjusted annual rate of 384,000, the U.S. Census Bureau reported.

That’s the fastest pace of new-home sales since November 2008 but represents a 21.3 percent decline from a year ago. At that rate, it would take 8.8 months for the 281,000 new homes on the market at the end of June to be sold, when six months of inventory is considered a more healthy balance between supply and demand.

Inventories of unsold new homes expressed as months of supply declined for the third consecutive month. During the current downturn, the months’ supply of new housing peaked at 12.4 months in January. In terms of raw numbers, the inventory of unsold new homes peaked in July 2006 at 572,000.

The rate of new-home sales remains depressed despite a 25.5 percent drop from a year ago in the median price of new homes sold in June, to $206,200.

The National Association of Home Builders testified before a Congressional subcommittee last week that appraisal practices and restricted credit for home builders threatens to prolong the current downturn.

A recent NAHB survey of more than 500 builders found that nearly 60 percent reported "serious problems" with appraisals on their homes coming in 15 to 20 percent below contracted sales prices, NAHB Chairman Joe Robson said in prepared testimony to the House Small Business Subcommittee on Finance and Tax.

Problems usually arise when comparable sales are based on foreclosures and distressed sales, Robson said. Among builders reporting appraisal problems, 54 percent said appraisals were coming in at less than the cost of building the home, including land, labor and materials.

Appraisals are "a major contributing factor" to a crisis in "AD&C" lending — acquisition, development and construction, Robson said.

Falling appraised values for land and subdivisions under development have led some financial institutions to stop lending to developers and builders, demand additional equity, and even "call" (demand full repayment of) performing loans, Robson said.

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