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Sales of newly built single-family homes in June soared by 11 percent from May sales amidst repo homes lists, based on data released by the U.S. Commerce Department. The June increase was the highest monthly increase in almost 8 years, as buyers took advantage of lower home prices largely driven by the low prices of properties in repo homes lists.

According to the Commerce Department, the 11-percent monthly increase was far above the 3-percent increase predicted by economists for June new home sales. The adjusted annual pace of new home sales in June increased to 384,000 units, the highest level reached since November last year.

However, compared to new home sales in June last year, June sales this year marked a 21-percent drop. Sales of newly built homes are still being battered by the low prices of units in repo homes, New homes now stay in the market for almost one year before they are sold. In 2007, new homes stayed in the market for only about 6 months.

Economists say that despite the monthly rise in new home sales in June, the housing sector is still not recovering as expected.

In the Northeast, sales of newly built homes declined by 11 percent compared to sales in June 2008. In the West, new home sales fell by 10 percent while in the Southern States, new homes sales dropped by more than 33 percent. Only the Midwest experienced a rise in new home sales, with an increase rate of 6 percent.

While new home sales increased in June, their median price continued to decline, falling from $232,000 in June 2008 to $206,200 this June.

Economists expect new home prices to continue with their downward slide because of construction supply costs, competition from repo homes lists and low demand from potential new-home buyers.

MFR chief economist Joshua Shapiro said prices of newly built homes will continue to hover in the lower levels, especially in the upper price ranges.

Similarly, 4Cast senior economist David Sloan said that market recovery will be modest because of lack of improvements in consumer income levels.

According to economists, despite the rise in new-home sales for three months in 2009, the continued increase in unemployment rates, the lack of increase in wages and the tightness in home lending will drive the continued growth of repo homes lists and continued difficulties in the housing sector in the last months of 2009.

Market data showed that the number of short sales on repo home listings jumped by almost 55 percent in June, from 38 percent. The figures caused alarm on some industry experts who predicted that as many as 10,000 units will soon enter the foreclosure market.

But the U.S. Foreclosure Index for the second quarter showed a drop in the number of properties on repo home listings. Foreclosures dropped 11 percent to 205,301 from the first quarter of 2009. Industry experts are not sure what triggered the nationwide foreclosure decline last month, whether it is because of the moratorium, the government bailout or the loan modification program of the Obama Administration.

But in Clark County, California, the foreclosure numbers were less upbeat as they rose to 2,686 last month compared with 2,397 in May. Last month?s figures were also below previous June?s foreclosures when 2,867 properties were on repo home listings.

Meanwhile, June preforeclosure filings, including notices of default and foreclosure auction, declined drastically to 5,443 from the peak of 8,107 the previous month. The figures were higher from the 5,103 posted the same month last year.

For the first half of this year, the total foreclosure in Clark County jumped to a whopping 23,588 from last year?s 12,800. Furthermore, preforeclosures also rose by 34.8 percent or 47,467 units from last year?s 30,922.

Meanwhile, nationwide data showed that preforeclosures dropped by 10 percent from April to June to 494,078, with Midwest showing the largest decline by 42 percent.

However, some industry experts caution against reading too much from the foreclosure declines posted in the second quarter. They said that the current trend is just a temporary lag, citing the 10,000 to 20,000 distressed properties that banks have been intentionally holding off the market. The number of REO homes in all property listings dropped from 51 percent in January to about 39 percent in June.

But what really bothers some industry experts was the increase in the number of short sale deals. Some experts find the trend disturbing considering the deteriorating employment market and poor performance of economic indicators.

They warned that the foreclosure problem is far from over as banks are expected to unload their inventory of REO properties on repo home listings.

The MetroMonitor study showed that the city of McAllen, Texas saw growth in output and employment during the first three months of this year despite the continuous increase in the number of repossessed homes.

Brookings Institute’s national study tracked various economic indicators in the country’s 100 biggest metropolitan areas.
According to the study, McAllen is the only city across the country that experience growth in the total value of services and goods during the first three months of this year, when recession was at its all-time low. The study tracked the performance of various economic indicators in 100 biggest metropolitan areas in the country.

The study showed that while there was no city that has not been affected by the economic downfall, recessional problems have been distributed unevenly across major cities in the country.

Brookings Institute researcher Howard Wile said that the effect of the economic recession in different areas suggests that they have different needs. He added that cities that have been severely affected by the recession need additional state funds.

The study monitored major cities? unemployment rate, employment, housing prices, gross metropolitan product, wages and the number of repo homes that remained on the market after the auction, to determine the area’s economic strength. Six cities in Texas made it to the top 20 metro areas that have positive economic performance.

Meanwhile , foreclosure home sales in McAllen fell below the previous year’s rate and the number of repossessed home filings continues unabated across the city’s real estate market. But the city’s overall performance is better off than others, indicating that the market is showing some signs of stabilizing.

The city outdid the national average in terms of economic indicator performance, except in unemployment which surged by 10.1 percent in January of this year, then started declining again until in May when it increased by 9.4 percent.

In May, job losses were reported mostly in production and manufacturing sectors while the city’s nonagricultural unemployment rate, inflation-adjusted sales in retail and inflation-adjusted wages continue to fall this year.

On the other hand, housing prices in McAllen increased by 2.3 percent in the first quarter of this year compared with last year. However, overall prices were still lower than their peak prices because of the flood of repossessed home in the area.

Many homeowners know that if they missed paying several installments of their mortgage, they are going to end up on a repo list. Or that if they also missed paying their property taxes, they could be put on the foreclosure block.

A growing number of repossession properties in Portsmouth, Virginia have become fire hazards and magnets to vagrants and thieves.

The growing number of properties on repo home listings in New Jersey is pulling down home prices in the state. According to market data, about 16,800 homeowners with properties on listings for sale have reduced their market prices. This represented discounts of about $730 million.