WASHINGTON – New U.S. home sales rose by the largest amount in more than eight years last month, in another sign the housing market is finally bouncing back from the worst downturn in decades.

The Commerce Department said Monday that sales rose 11 percent in June to a seasonally adjusted annual rate of 384,000, from an upwardly revised May rate of 346,000.

It was the strongest sales pace since November 2008 and exceeded the forecasts of economists surveyed by Thomson Reuters, who expected a pace of 360,000 units. The last time sales rose so dramatically was in December 2000.

Sales have risen for three straight months. The median sales price of $206,200, however, was down 12 percent from $234,300 a year earlier and down nearly 6 percent from $219,000 in May.

The report is another encouraging sign that the beleaguered housing sector is finally coming back to life. Last Thursday, the National Association of Realtors reported that home resales posted a monthly increase of 3.6 percent in June.

There were 281,000 new homes for sale at the end of June, down more than 4 percent from May. At the current sales pace, that represents 8.8 months of supply — the lowest level since October 2007.

Fallout from the housing crisis has played a central role in the U.S. recession, now the longest since World War II. Foreclosures have spiked, homebuilders have slashed construction, and financial companies have lost billions.

Tips for the Spring Selling Season

If you're staging your home for sale, don't neglect your garden.

The cherry blossoms are in full bloom in my hometown of Washington, D.C., marking the beginning of the spring home selling season.

If you, like me, are preparing to put your home on the market, that means that you not only have to stage your home's interior to impress potential buyers, but you have to spruce up your yard, too.

Although many sellers in my market hope that a drift of daffodils will clinch a deal, in truth, plants can hurt a home's curb appeal as much as they can help it. For instance, a drift of wild, weedy onions hidden in the grass can make a newly mowed lawn smell like a gas station restroom; trees planted too close to a house mask its best features and conjure alarming visions of weekends on a rickety ladder, cleaning gutters.

View Full Image

Getty Images

Cherry blossoms in bloom this week in Washington, DC.

That's not the impression you want to make on buyers who fantasize about lounging on the patio, not messing with pole pruners. So here are some tips for staging your yard for sale:

• Baby the lawn. Find a high-quality weed killer with lots of micronutrients as well as nitrogen, phosphorus and potassium with pre-emergent herbicides (organic ones use corn gluten) to kill growth before it starts. Send your soil to your county or state's extension service, an agricultural resource center that you can find through the USDA's Web site, to have its pH levels tested; spread lime on your lawn if the pH level is below 6.0, or an acidifying agent like gardener's sulfur if it is above 7.0. And set your mower high (about three inches) to reduce the grasses' stress and cut down on the need for water.
• Trim the overgrowth. Prune any branches that touch the house, cover a window or block a path. To reduce mold growth, keep plant material at least a foot away from siding.
• Splurge on mulch. The new mulches that retain color throughout the season cost about a dollar a bag more than traditional mulch, but good first impressions are worth it. Although I normally use chipped mulches because they last longer, I plan to use a finely shredded texture this spring for its superior visual appeal.
• Edge your flowerbeds. There's no easier way to make your yard look neat and groomed. Don't bother with the plastic edging; simply tie a string between two sticks and follow the line with a sharp, flat-ended spade pushed about four-to-six inches into the soil.
• Powerwash everything. Cobwebs, mold and dirt accumulate on decks, patios, fences, trellises, eaves, windows and siding over the winter, but can be blasted away in an afternoon with a power washer. Just be sure not to get the water under the siding courses or in soffit vents, where the moisture can cause damage.
• Plant annuals. Perennials are wonderful if you're building a long-term garden, but they are expensive and tend to have short blooming seasons. For color and impact, place low-care annuals like impatiens, petunias and geraniums in beds. Potted flowers and hanging baskets can brighten dull spots in your yard, draw attention to features you want to emphasize or flank an entrance—and you can take them with you when you move.
• Plant a garden. If you have a sunny corner, a small raised bed with decorative veggies such as rainbow-stemmed Swiss chard and bush beans, or fragrant herbs like sage and rosemary, can suggest your yard is useful as well as pretty. (And hey, the Obamas did it.) But stay away from plants, like corn, that suggest a barnyard, or are prickly and prone to spilling out of bounds, like summer squash and pumpkins. If you must have tomatoes, choose pretty, bush-style cherry tomatoes rather than the regular vining varieties which need to be caged and are prone to unattractive wilts and fungal attacks.
• String a hammock. Nothing suggests that the living is easy (and your yard is low-maintenance) as much as a hammock. If you don't have two trees close enough to string one between them, spring for a hammock stand.
• Create conversation areas. To draw attention to a birdhouse, sculpture or other attractive feature in your yard, arrange two colorful side chairs and an end table facing it. When you have an open house, place a book

By Dina ElBoghdady
Washington Post Staff Writer
Saturday, June 27, 2009

When Natalie deWolf and her husband listed their District home for about $1.2 million in April, they were competing with roughly 25 similarly priced houses in their Chevy Chase neighborhood.

"Only four houses had gone under contract in that price range in the previous four months," said deWolf, who sold her home last week. "It was a little nerve-wracking." Many of the homes, she said, are still for sale.

While entry-level homes are getting snapped up by bargain hunters across the Washington region, pricey ones are languishing. This excess supply is a setback for some pockets of this area where single-family homes listed for $1 million or more make up a sizable chunk of the offerings -- about 85 percent in Cleveland Park, 73 percent in Great Falls and 55 percent in Potomac, according to research firm Delta Associates.

Even in the best of times, high-end homes take longer to sell because there's thinner demand for them; this down market has exacerbated matters.

That's because pricey homes are the province of move-up buyers, many of whom have watched their home values decline, their financing options shrink and their net worths erode as the economy soured. For trade-up buyers, the $1 million-plus homes that were within reach a few years ago are no longer an option. These prospective buyers are reluctant to take on debt even if they can afford it. And as they retrench, high-end sellers are left in a lurch.

In the Washington area, nearly 16 percent of single-family homes listed for $1 million or more were under contract as of this week, compared with 44 percent of homes listed for less than $1 million, according to Delta Associates, which analyzed data from the local Multiple Listing Service.

"I keep saying to these [high-end] sellers, do you really have to sell right now?" said Michael Briggs, vice president of professional development at McEnearney Associates, a local real estate brokerage. "It's not hopeless, but it may be more difficult to sell than anyone ever imagined, and none of these regions are immune."

The toughest challenge is for sellers in outlying suburbs, he said. In Howard County, three out of 130 high-end homes for sale went under contract from mid-May to mid-June, said Briggs, who pulled data from the local Multiple Listing Service. In Loudoun County, six of 107 homes went under contract and only one of 64 did in Prince William County.

Real estate agent Jane Fairweather, who has done her own number-crunching for homes in the close-in Maryland suburbs, said the market for "glamour houses" -- those listed for $2 million or more -- is at a standstill in Bethesda, Chevy Chase and Potomac.

"More than one-third of the homes that went under contract had at least one or more price reductions," Fairweather said. "And about 10 percent of the sellers have pulled their house from the market. People just gave up."

Among them was Anson Smith, a developer who listed a home he built in Bethesda for $2.6 million in September. After receiving only one low-ball offer, he decided to rent the place, convinced that too many psychological factors were holding buyers back.

"People are not comfortable that they're getting value, because they're not sure what the house will be worth in a few months or a few years," Smith said. "Even people that can afford that price bracket won't buy because they feel it's the wrong statement right now."

Financial issues are in play, too.

Real estate agents say that lenders, eager to protect themselves against further losses, are imposing stringent requirements even on credit-worthy borrowers looking to buy high-end homes.

In the Washington area, mortgages that exceed $729,750, or "jumbos," carry higher interest rates than smaller loans and require heftier down payments -- typically 30 percent. Once the loan amount gets past $1.5 million, the down-payment requirements can go up to 40 percent or more.

"They may also need eight to 12 months worth of mortgage payments in reserve to qualify for the best rate," said Steve Calem, president of Capital Funding Group, a mortgage consulting and advisory firm. "It's a market for cash buyers right now, and that's really impacted the sale of bigger houses."

It's not as if many people who own those homes are in dire straits. A healthy share of them have equity and are not under tremendous pressure to sell.

But that does not mean that the high-end market should be ignored, said Lawrence Yun, chief economist of the National Association of Realtors. Getting the real estate market back on track means that all segments of it need to function.

A recent survey by the Realtors group found that the No. 1 reason people are not buying high-end homes is because they are unable to sell the homes they own, in part because they are competing with aggressively priced foreclosures.

"If first-time buyers are buying vacant homes, that does not create trade-up buying activity," Yun said. "They are not freeing up any move-up buyers."

To help remedy the glut, Tom Kunz, chief executive of Century 21, descended on Capitol Hill with some of his real estate agents. They urged lawmakers to expand a temporary $8,000 tax credit for first-time homebuyers to include anyone who is buying a principal residence. Kunz and other real estate firms also are lobbying to boost the credit to $15,000, as proposed in recent legislation.

"We need to focus on the supply side of the equation versus looking only at the foreclosure side of it," Kunz said. "By doing this, we can help the economy out of the doldrums we're in."

Deborah Johnson didn't want to wait that long. She remembers the 1980s, when home values plummeted and stayed there for years. With that in mind, and knowing that she will want to move out of the area in the near future, she put her Bethesda home on the market for slightly less than $2 million. Six weeks later, she sold it for $50,000 less than the asking price and a few thousand dollars less than she and her husband paid for it nearly five years ago.

"It was like: 'What? Depreciation? How can that be?,' " Johnson said. "But sellers have to suck it up. Price is the number one factor. After that, the property has to be exceptional from every angle, cosmetically and functionally, to sell. Many sellers can't wrap their minds around that."