Existing home sales bottomed out in the first quarter and sales should be up 3% when the final numbers come in for the second quarter, according to National Association of Realtors.

NAR economists are forecasting that sales will total 4.72 million in the second quarter and rise another 5% in the third quarter.

Housing affordability is at historic highs and the first-time home buyer tax credit is fueling demand.

"Strong activity by entry level buyers is helping absorb inventory and [allowing] some existing owners to make a trade," said NAR chief economist Lawrence Yun.

 NAR pending sales rose ever so slightly in May to 90.7, up from 90.6 in April. The index tracks signings of sales contracts and it is a forward-looking indicator of existing home sales.

But the Realtors are concerned that appraisal issues are hindering some sales. "Closed existing home sales have improved but are coming in lower than expected because some contracts are delayed or falling through," Mr. Yun said.

NAR wants regulators to suspend the implementation of a new GSE appraisal code that went into effect May 1 that it blames for appraisal issues.

Other market participants and observers say the problem may be driven less by the code's implementation and more by lower recent market prices and foreclosure sales.

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