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Pending home sales have been rising for four consecutive months, made possible by affordable home prices and a first-time buyer tax credit, according to the National Association of Realtors (NAR).

The Pending Home Sales Index, increased to 90.7 in May up from 90.6 in April, and is 6.7% higher than May 2008, when it was 85.

However, NAR chief economist warns “Closed existing-home sales have improved but are coming in lower than expected, because some contracts are delayed or falling through from the application of new appraisal rules for many transactions,” he said in a statement, alluding to the Home Valuation Code of Conduct that went into effect in May. “Rises in contract activity show buyers are becoming more active, even as they face much more stringent loan underwriting standards. Speedy clarification of the appraisal rules could smooth a housing market recovery and support the overall economy.”

According to NAR President the appraisal issue complicates matters “We see that distressed homes often are selling for 20 percent less than normal homes in the same area, but some appraisals don’t distinguish between traditional homes and distressed property,” he said. “In many cases, appraisers from outside the area are being used, but as everyone knows, real estate is local, and appraisals should be done by an expert with local expertise.”

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