Strong Housing Numbers, Still Slow Recovery

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The number of home buyers signing contracts to buy existing homes jumped nearly six percent in May to the highest level since April of 2010, according to a new report from the National Association of Realtors.

Back then buyers were rushing to beat the deadline for the home buyer tax credit. This spring buying surge was particularly strong out west where the NAR’s Pending Home Sales Index jumped 14.5 percent. Investors are driving the market out West, racing to buy distressed properties and take advantage of today’s very hot rental market.

Realtors say they expect total home sales for 2012 to be up around 10 percent from a year ago, but they caution that low inventory and tight credit, for buyers and builders alike, are holding the market back.

“If credit conditions returned to normal, and if we had more inventory, especially in the lower price ranges, more people would become successful buyers,” writes NAR’s chief economist Lawrence Yun in a release. “In an environment of historically favorable housing affordability conditions, it’s frustrating to see some consumers thwarted in the process.”

The supply of homes for sale has dropped precipitously in the past year, as banks are slower to work through delinquent loans, investors are grabbing up foreclosures at a fast pace, and negative equity is making it impossible for many sellers to list their homes on the markets. Mortgage delinquencies are down to their lowest level in four years, according to a new report today from the Office of the Comptroller of the Currency (OCC). New home construction is still near record low levels, despite rising off its bottom.

“There may be a housing recovery because they’re not building any new houses,” noted Jim Cramerthis morning on CNBC’s "Squawk on the Street."

Public home builder Lennar, based in Miami, beat earnings expectations, with new orders up 40 percent in the second quarter. Pricing is also improving.

“Evidence from the field suggests that the ‘for sale’ housing market has, in fact, bottomed and that we have commenced a slow and steady recovery process,” noted Lennar CEO Stuart Miller in the earnings release. “The recovery process continues to be very localized.”

Some analysts warn that while the spring season has been the strongest since the housing crash, there are still millions of delinquent loans to work through, which combined with negative equity and still-tight credit, could create a zig-zagged recovery at least through the end of 2012.

Questions? Comments? RealtyCheck@cnbc.comAnd follow me on Twitter @Diana_Olick