Home sales in Hampton Roads increase strongly in June

Homebuyers returned to the South Hampton Roads housing market in June, apparently driven by low interest rates, lower prices and tax credits, according to a report released Friday.

Sales of existing homes jumped last month as the spring and summer selling season hit full stride and prices climbed slightly, according to Real Estate Information Network Inc., the Virginia Beach-based multiple listing service.

The service released data showing that 1,238 homes sold last month, up 28.6 percent from May and up 9.3 percent from the number sold in June 2008.

It's the first year-over-year increase in sales volume since January 2007, suggesting that the local housing market might be reaching a bottom in sales volume.

"It was a good month," said Ron Pearman, regional vice president for Long & Foster Real Estate. "I really did feel like there was some pent-up demand, and some of those buyers apparently decided to pull the trigger."

Interest rates for 30-year, fixed-rate mortgages have fluctuated in recent weeks, encouraging some buyers to try to lock in a rate before they tick up again, he said. The $8,000 first-time homebuyer tax credit also has been important.

Pearman cautioned, however, that one month doesn't make a trend. "We're hoping it will continue, but we'll have to wait and see," he said. "We still have an enormous amount of inventory, and sellers need to get realistic" when pricing their homes.

The median price for an existing home in June was $222,750, up 1.3 percent from May but down 4.4 percent from a year ago. The median is the point at which half the prices are higher and half are lower.

Vinod B. Agarwal, an economist at Old Dominion University, predicted prices will continue to fall even as sales volume holds steady.

"If anyone is expecting a significant recovery in the housing market in terms of housing prices, I think they're dreaming," Agarwal said. "I would expect that buyers are still in the driver's seat, which means they may be in the position to demand concessions, which aren't reflected in closing prices."

In a separate report released Friday, economists at the Hampton Roads Planning District Commission also said they expect home prices in Hampton Roads to fall.

"There are significant challenges to that market maintaining its current price point," economists Greg G. Grootendorst and James A. Clary wrote.

The two economists estimated as much as a quarter of all home sales in the region in recent months have been foreclosures or short sales, in which a property is sold for less than the amount owed to the bank.

The multiple listing service reported that 15.5 percent of June's sales were marked as a foreclosure or short sale. That's compared with about 5 percent during June 2008.

Those properties, which are selling for much less than regular homes, are much more likely to represent the actual market value, the economists wrote.

The planning district economists also attributed recent inventory declines to homeowners pulling properties off the market until prices pick up.

The report from the multiple listing service showed that the number of homes on the market last month in all of Hampton Roads fell less than 1 percent, to 14,284 from 14,401 in May.

The average time on the market for existing homes in Hampton Roads was 83 days in June, compared with 76 days at the same point last year.

The inventory and market time figures include the Peninsula and outlying regions such as Williamsburg and northeastern North Carolina.

Josh Brown, (757) 446-2318, josh.brown@pilotonline.com