More people likely bought previously occupied homes in June, although not enough to lift a market beset by falling prices, rising foreclosures and paltry demand.
Economists expect the June sales pace rose nearly 2 percent from May to a seasonally adjusted annual rate of 4.9 million homes, according to a survey by FactSet. The National Association of Realtors will release the report at 10 a.m. Eastern Wednesday.
Sales sunk in May to the weakest point of the year and they remain far below the roughly 6 million annual home sales that are more typical of healthy housing markets.
Since the housing boom went bust in 2006, sales have fallen in four of the past five years and hit a 13-year low last year. Declining home prices and super-low mortgage rates haven't been enough to boost sales this year.
Declining home prices have kept many people from selling their houses and taking new jobs in growing areas. They have also made people feel less wealthy and that has reduced the consumer spending that drives about 70 percent of economic activity.
Purchases made by first-time homebuyers are falling. Bigger down payments, tougher lending rules, high debt and a shortage of desirable starter homes are keeping many would-be buyers away. Even some with good credit and enough money for a down payment are holding off because they are worried home prices will keep falling.
First-time homebuyers are critical to a strong and stable housing market. They normally make up about half of all home sales. Now, they make up just 35 percent of sales. They tend to keep their homes for years. What's more, their purchases of low and moderately priced homes allow sellers to move up to pricier homes.
Wealthy buyers are still purchasing homes priced at more than $1 million in the affluent Northeast and growing Midwest. And investors are scooping up dirt-cheap homes in the battered South and West for less than $100,000. Investors are targeting deeply discounted homes in hard-hit areas, such as Phoenix, Las Vegas and Tampa, Fla.
Foreclosures and short sales _ when a lender agrees to sell for less than what is owed on a mortgage _ make up an increasingly large portion of all home sales. And a wave of foreclosures are being held up, either by backlogged courts or lenders awaiting state and federal probes into troubled foreclosure practices.
Another growing problem: some sales that are under contract and almost finished are falling apart at the last minute. The Realtors' trade group has noted that an increasing number of deals have been canceled because appraisals came in below a negotiated price, scuttling home loans in the process.
Re-sold homes are a bargain compared to new homes. The median price of a new home is more than 30 percent higher than the median price for a previously occupied home. That's twice the normal markup.
A glut of millions of unsold homes is also weighing on prices, forcing sellers to slash their prices in order to grab the attention of potential buyers.
Most economists say home prices will keep falling, by at least 5 percent, through the rest of the year. Many forecasts don't anticipate a rebound in prices until at least 2013.