MIAMI (AP) — First-time homebuyers took advantage of sinking prices and low mortgage rates in the South in May, but problems with appraisals delayed transactions and became an obstacle for both buyers and sellers.
Sales of existing homes slid 11 percent in May and showed no improvement over April, the National Association of Realtors reported Tuesday.
Meanwhile, foreclosures kept pushing down prices in much of the South, where the median sales price declined nearly 10 percent to $157,400, the Realtors group said.
Nationally, May sales of existing homes declined 6.6 percent compared with the same month last year, without adjusting for seasonal factors, while the median sales price fell nearly 17 percent to $173,000.
For the fourth consecutive month, existing home sales increased on a year-over-year basis in Washington D.C. and the Florida cities of Miami, Orlando and Tampa, according to The Associated Press-Re/Max Housing Report released Tuesday. However, sales volume decreased in 16 other metro areas covered by the AP-Re/Max report, including a 40 percent drop in sales in Jackson, Miss.
The AP-Re/Max report analyzes all home sales recorded by all real estate agents, regardless of company affiliation, in the metropolitan statistical areas.
The AP-Re/Max report also showed that median sales prices fell in 16 metro areas, including drops of more than 40 percent in Miami and Orlando, where a glut of unsold homes due to foreclosures remain a problem.
Lawrence Yun, the Realtors group's chief economist, said poor appraisals are stalling transactions or keeping buyers from getting a loan.
Jeff Humphreys, director of economic forecasting at the University of Georgia, said the housing market appears to have hit bottom in terms of sales activity, with first-time homebuyers using an $8,000 tax credit to provide "high-octane fuel" for the market. Nationally, first-time buyers made up almost 30 percent of existing home sales in May, the Realtors group reported.
But prices will likely continue to fall into the first quarter of 2010, because foreclosures stemming from job losses will weigh down values, Humphreys said.
"We're beginning to see recovery in the housing market, but it's a recovery from an extremely depressed level," Humphreys said.
Despite signs of life in parts of the South, two North Carolina metro areas, Charlotte and Raleigh-Durham, saw sales fall by 39 and 31 percent, respectively. Median prices dipped 10 percent in Raleigh-Durham and 9 percent in Charlotte, the AP-Re/Max report showed.
Real estate agent John Wood notes that buyers who relocate to Raleigh-Durham for jobs have helped home sales in the past, but that segment of the market was taking a hit because people are having trouble selling in other cities before moving.
"There are relocating corporate sellers that are out there that are basically doing all they can to sell their homes quickly, and that means price reductions," said Wood, a Re/Max agent based in Cary, N.C.
Still, there are buyers who are finding exactly what they want. Retirees Clare and Baxter Hill have signed a contract to buy a $393,000 home in Wake Forest, N.C. and will be relocating from Silver Spring, Md., in search of less congestion and a quieter lifestyle.
They did an Internet research before starting their North Carolina house hunt, and even bought a global positioning system for their car to find properties with ease. They found a 2,800-square foot home with enough room to accommodate Clare Hill's 96-year-old mother.
"It took us two weeks, which we thought was quite a miracle because we were able to find something we wanted so fast," Clare Hill said.
In the Baltimore metro area, May existing home sales slid 11 percent compared with the same month the year before, while the median sales price fell 9 percent to $245,000, the AP-Re/Max report showed.
David McIlvaine, president of the Greater Baltimore Board of Realtors, said he's seen an uptick in buyer interest, including more phone calls to his office and more properties with multiple offers.
McIlvaine also noticed some problems with appraisals — he had to appeal one because he felt the appraiser had undervalued the home.
"In some cases, appraisers are asking for standards that are higher than they once were," McIlvaine said.
In Nashville, Tenn., May sales dropped 29 percent compared with the same month last year, while the median sales price slid nearly 9 percent to $166,950, the AP-Re/Max report showed.
Real estate agents in Nashville, as in many other cities, are counting on first-time homebuyers and relatively low interest rates to help boost sales. Nashville had 2,000 sales pending at the end of May, the highest levels since September of last year, the Greater Nashville Association of Realtors reported.
"For buyers, this is a very important time," said Mike Nichols, president of the Nashville Realtors group. "Many factors remain in their favor ... However, those factors will not remain that way indefinitely."
Copyright 2009 The Associated Press.