Home sales stabilizing, but prices still falling

By Alan Zibel
ASSOCIATED PRESS
Wednesday, June 24, 2009

WASHINGTON — Nationwide home sales may have finally hit bottom, new data show, but a host of thorny problems are hindering a recovery.

Sales of previously occupied homes rose by 2.4 percent from April to May — the third monthly increase this year — but the results missed analysts’ expectations.

Home sellers are still competing against a growing number of bargain-priced foreclosures, buyers are paying higher mortgage rates, and new rules for property appraisers are delaying or scuttling many deals.

“We have just been flooded with e-mails, telephone calls on the appraisal problems,” said Lawrence Yun, the Realtors’ chief economist.

…New rules designed to tackle conflicts of interests in the property appraisal process have caused many transactions to fall apart or be delayed.

Responding to widespread complaints about inflated appraisals during the real estate boom, New York Attorney General Andrew Cuomo reached a pact last year with mortgage companies Fannie Mae and Freddie Mac on a new code of conduct for the industry.

Since the rules took effect May 1, real estate agents and mortgage brokers say a number of appraisals are coming in surprisingly low.

The National Association of Realtors is pressing regulators to put an 18-month hold on the code, arguing in a letter Monday to regulators that the code is “hampering the housing market’s recovery.”

Although the new rules are not ideal, appraisers are not to blame for a market in which prices are falling rapidly, said Bill Garber, director of governmental relations at the Appraisal Institute.

He defended the industry, saying, “The appraisers only report what’s going on in the market.”