Much of the current growth in existing-home sales is investor-driven, however, because mortgage credit remains tight and owner-occupied sales still constitute a smaller share of the market than needed for sustained improvement.
The precipitous drop in housing prices since the bubble burst in 2006-07 created millions of potential bargains for investors, who typically pay cash.
Yun said the all-cash deals, accompanied by a recovery last year in vacation-home sales, were “hiding the current dysfunctional mortgage market. Tight mortgage credit is holding back a stronger recovery. Banks are hoarding cash, possibly from regulatory uncertainties and lawsuits.”
The regulatory uncertainties center on rule-making efforts by the Consumer Financial Protection Bureau, which is responsible for implementing provisions of the Dodd-Frank act for reform of the mortgage industry.
Those rules will be proposed formally in the summer and are required to be in force by January 2014.
Home sales had been flat basically from 2008 through 2011, despite government efforts to kick-start the real estate market with tax credits in 2009 and 2010 — a move that many in the industry say postponed recovery when sales and prices plummeted for more than a year after the program ended.
Yun predicts existing-home sales of 4.6 million to 4.7 million in 2012, compared with 4.26 million in 2011.
In the first four months of 2012, existing-home sales in the eight-county Philadelphia region totaled 12,106, compared with 11,083 in January through April 2011, a 9.2 percent increase, according to the latest data from Prudential Fox & Roach HomExpert. There were 4,421 sales contracts signed in April, compared with 4,533 in March, but that was 14.1 percent more than in the same month in 2011, HomExpert reported.
The data focus this week will be on national home sales. A rise in sales contracts for existing homes nationally in February and March points to an increase in closings in April, according to economist Patrick Newport at IHS Global Insight in Lexington, Mass., “but much will depend on successful mortgage applications and all-cash investor sales of distressed properties.”
IHS predicts a “minor increase in sales” — 2.7 percent to a 4.6 million annual rate.
Meanwhile, an increase in permits for new home construction in April suggests builders observed an uptick in new-home sales that month, Newport said, adding that “we have penciled in a 2 percent increase, to 335,000 units.”
Contact Alan J. Heavens at 215-854-2472, aheavens@phillynews.com, or follow @alheavens at Twitter.
