Home Sales Stay Sluggish - TheStreet

Updated from 11:08 a.m. EDT

The U.S. housing market continues to show few signs of improvement, with existing-home sales falling again in June and inventories remaining at historically high levels.

The National Association of Realtors said Wednesday that sales of existing homes in June reached an annual rate of 5.75 million units, down 3.8% from May and 11.4% from a year earlier. Economists expected a rate of 5.9 million sales, according to estimates from



The NAR report said total housing inventory fell 4.2% at the end of June to 4.20 million units. At the June sales pace, that still represents 8.8 months of supply, the same as the May level, and is the highest since 1992.

The national median existing-home price in June was $230,100, a 0.3% rise over a year earlier. The median is a typical market price where half of the homes sold for more and half sold for less.

The NAR report is one of several data pieces on housing this week. On Thursday, the Census Bureau will release data on new-home sales. As well, several homebuilders are reporting their results for the recently ended quarter.

Homebuilder stocks have

hit new lows this week as worries about the ongoing housing slump and mortgage lending take their toll.

Late Tuesday,



reported a large quarterly loss because of hefty land-impairment charges.

Centex management told investors on the company's earnings call Wednesday morning that home sales improved in June, relative to May. Cancellation rates came down, and the pace of sales was more consistent in June, management said.

However, overall buyer traffic was flat across the quarter and discounts offered for homes remained consistent.

"Sales remain choppy; the market remains difficult," Centex CEO Timothy Eller told investors.

"Some markets seem to be stabilizing, but overall, we have a chronic oversupply issue and a chronic affordability issue," Eller added.

After the market closes Wednesday, fellow builders





(PHM) - Get Report


MDC Holdings

(MDC) - Get Report

will report results.

Builder stocks were mostly higher Wednesday following a plunge Tuesday. Centex was up 45 cents, or 1.2%, to $39.49; Pulte was adding 29 cents, or 1.4%, to $20.75; and Ryland was up 32 cents, or 1%, to $33.02.

Tarragon Crushed

One loser was small-cap builder


( TARR), which slid as much as 21%. The company has been a favorite of short sellers, who claim it may be facing a

liquidity crisis. Shares have now fallen more than 50% in the past month.

Compounding the liquidity concerns is a theory being floated around trading desks that Bill Friedman, Tarragon's chief executive, is facing margin calls. Friedman confirmed in a spring interview with


that he has pledged some of his personal Tarragon stock into a margin account with a brokerage firm.

If he has borrowed against his stock in the margin account, then the brokerage firm could be forcing him to either provide more cash or sell Tarragon stock, says one institutional broker who follows the stock. Friedman's family owns about 50% of Tarragon's stock.

Late Wednesday, the company issued a statement in response to the volatile trading, saying that there has been no change in its outlook or financial position.

Shares pared their losses and recently were down 65 cents, or 10%, to $5.67.