The National Association of Realtors’ released June existing home sales data today.  Economists had been expecting a minor increase but instead a decline was reported, registering the lowest month of the last seven.  The seasonally adjusted annual rate for the nation in June was 4.77 million, a decline of 0.8% from May, and an 8.8% decline from 2010. However, the closing comparison to last June, which was when the tax credits expired, is a tough comparison to make.  Besides the surprise (which wasn’t a surprise to me), the more interesting news was that NAR reported that median existing home prices increased 0.8% year-over-year.  On the pricing front, we’re seeing much more evidence of price stability and improvement in many large and high profile markets even though home closings remain depressed.

Our analysis is based on our Housing IntelligencePro (HIP) platform that tracks closings through detailed deeds recorded through April at over 2,000 counties across the country.  These counties are the largest counties in the U.S. so the visibility into housing activity is as complete as you can get, representing over 90% of the existing housing stock and new construction.  I chose April as a cut off to ensure the vast majority of the counties had substantially completed their recordings.  This is a lag over the NAR estimates, but I’d rather have accurate complete representation of year-to-date activity rather than an early estimate based on a model.

On the closings front, 2011 year-to-date does not compare well to 2010, and that’s not surprising given the aforementioned tax credits distorting the market through June of last year.  But what is somewhat promising is that year-to-date foreclosures are down the most compared to new home closings, regular resales, and REO (bank) sales.  Year over year, we are seeing that foreclosures are down 25% in total.  It is not clear if this is an actual sign that the foreclosure wave is starting to diminish or if banks are simply slower at processing foreclosures in 2011 than they were in the first half of 2010.

Looking at closings by property type, we are not seeing any major changes in the distribution of closings as both single-family detached and attached homes like townhomes and condominiums are down in relative volumes.

Where real year-over-year and market differences are starting to emerge is in the prices of homes closed.

Year over year we are measuring that median existing home prices are down 2.3% compared to NAR’s up 0.8% figure in June.  Given I’m limiting our data to April closings, when June becomes more complete, we too may see a positive year-over-year comparison.  Regardless, I expected NAR’s price data to be more positive because of what we are seeing within the deed data.

According to HIP, the median price of regular resales is up 1% while REO sales are down 12%.  Since REO activity is still elevated, it’s dragging overall median prices down but it’s good to see that good old fashioned non-distressed sales are starting to show some signs of year-over-year improvement.

Within regular resales, single family is showing strength with a 1.4% increase in median price year-over-year compared to a decrease in all attached sales prices of 2.7%.  If more households elect to rent, we would expect to see more pricing pressure on attached products even as rents start to improve in apartments because the households electing to rent diminish the demand for owning comparable attached product more so than single family.  But eventually even the attached pricing should benefit if apartment rents continue to climb while vacancies fall.

Bringing some local market color to the analysis, we’re seeing interesting patterns emerge in the largest markets in the country.  To control the complexity, I focused on the largest 33 metropolitan statistical areas based on total home sales in 2010 to see what has been changing in 2011.

First, out of the 33 largest markets, only Phoenix and Las Vegas have total year-to-date closings up over 2010.  Total closings include new as well as existing home sales, but none of the big markets had year-over-year increases in new home sales.  Existing home sales were up in Phoenix and Las Vegas and were flat in San Francisco.  The bad news on the volume front for Phoenix and Las Vegas is that those markets were up in foreclosure activity as well as regular resales.  So part of the positive story nationally on declining volumes but increasing prices may be that we are in the early days of diminishing distress, assuming economic conditions don’t deteriorate from this point.

Markets that have rising regular resales (non-distressed) but diminishing foreclosure volumes include some very high profile California and Florida markets: Los Angeles, Miami, Riverside-San Bernardino, Orlando, San Francisco, Sacramento, Cape Coral-Fort Myers, and Jacksonville.  I will save it for another time to elaborate further on these markets, but chances are that a rising portion of the resales here are investors and not owner occupied, but nonetheless the activity is helping take inventory off the market and stabilize pricing.

As to where pricing is showing signs of improvement, there are the usual healthier markets as well as at least one surprise.  Median prices across all home sales including new homes are up year-to-date in seven of the largest MSAs: Dallas-Fort Worth, New York, Houston, San Antonio, Austin, Indianapolis, and Cape Coral-Fort Myers.  Guess which one I’m surprised to find?

All of those same seven markets show improving median home prices for total existing home sales as well.  That measure should be more on par with NAR’s calculation, so if these markets were positive year-to-date through April, it’s not surprising to hear that early June estimates show more markets and the total nationally starting to show signs of appreciation.

But looking purely at regular resales (good old fashioned arm’s length transactions between two parties and not involving bank sales of previously foreclosed homes), Cape Coral-Fort Myers drops off the list while Washington, Baltimore, and Denver get added.  So among regular resales, the markets we have been touting as being healthier are indeed showing signs of price stability even though closing volumes remain low.

If this trend continues, would be buyers may get off the fence.  Don’t be surprised if other price metrics start to reinforce this trend, but don’t start partying yet.  There remain substantial risks that could throw a damper on the improvements, most notably difficult underwriting standards, rising financing costs through upcoming changes in conforming loan limits, and the threat of the mortgage interest deduction being eliminated as part of the deficit compromise.

For additional market-level data and analysis please visit our website at http://www.housingintelligence.com.  For more detailed information on other indicators, please visit the following links: