July 25 2006: 3:27 PM EDT

NEW YORK (CNNMoney.com) -- It's official - even the nation's leading group of real estate agents now says it's a buyer's market in housing, as a soaring supply of homes for sale means nearly flat prices and longer waits for sellers.

The news came in the National Association of Realtors' report for June, which showed that home sales fell to the slowest pace since January while price gains were the smallest in over a decade.

The industry group said sales of existing homes fell to an annual rate of 6.62 million in June, compared with a 6.71 million pace in May. Economists surveyed by Briefing.com had forecast sales would slow to a 6.60 million rate.

June was the third straight month of declines, leaving sales 9 percent below year-ago levels, the group said. Moreover, the weakness was widespread, with sales falling in each of the four regions of the country.

The median home price did edge up to $231,000 from $229,000 in May.

But that marked only a 0.9 percent increase from a year earlier - the smallest year-over-year gain in home prices since May 1995.

As recently as October, prices had jumped a record 16.8 percent from a year earlier due to tight supplies and bidding wars among buyers.

"The change in price performance is directly tied to housing inventories - a year ago we had a lean supply of homes and a seller's market, with monthly home sales at an all-time record high," David Lereah, chief economist for the group, said in a statement.

"Sellers have recognized that they need to be more competitive in their pricing given the rise in housing inventories," he added.

The inventory of homes on the market is now at 3.7 million, up a whopping 39 percent from a year ago, or a 6.8-month supply at the current sales pace, up from a 4.4-month supply in June 2005.

The Realtors statement said the market has shifted to a "buyer's market," which it said is good news for those shopping for a home even if it posed a problem for those looking to sell.

"People who were discouraged by the bidding wars that were so common over the last few years are finding more choices now," said Thomas Stevens, a Realtor from Vienna, Va., who is president of the group.

Regionally, existing home sales in the Northeast saw the biggest decline, followed by the South.

Sales in the South fell 2.3 percent from May to a annual pace of 2.57 million, which was 5.5 percent below the rate a year earlier. The median price slipped to $191,000, down 0.5 percent from a year earlier.

Northeast sales slid 3.5 percent from the prior month and were 9.8 percent below a year ago. The median price in the Northeast was $298,000, up 7.2 percent from June 2005.

Sales in the Midwest were unchanged from a month earlier and down 6.2 percent from a year ago. The median price in the Midwest was $175,000, 1.7 percent below June 2005.

Existing-home sales in the West were also unchanged from May but sank 17.1 from June 2005. The median price in the West was $342,000, the same as a year ago.
 

There are some deals to be had buying homes from the government. Plus: 8 on the market now.

NEW YORK (CNNMoney.com) -- Who says there are no deals left in real estate? Government Web sites sell homes all over the country and many of them qualify as real bargains.

The sites offer homes from Housing and Urban Development (HUD), the U.S. Department of Agriculture and the Veteran's Administration. These agencies take possession of foreclosed homes and return them to the market.

Individuals can look at homes at HUD's Web site and Homesales.gov.

"It's one of the better deals you'll find anywhere," says HUD spokesman, Jerry Brown.

The properties are sold at appraised or below appraised value and the agencies, especially HUD, make them easy to buy with generous loan terms with low up-front costs.

"It's 3 percent down and 100 percent yours," says Brown.

The HUD homes are acquired when a mortgage holder defaults on a Federal Housing Administration (FHA) mortgage, which are goverrment sponsored loan guarantees designed to promote home ownership, especially for working class and lower income Americans. When the loans go bad and lenders foreclose on the properties, the agency pays the lenders off and takes over the homes.

"Because the sub-prime loans target low-income borrowers and those with impaired credit, many loans go into default," says Laurie Maggiano, who heads HUD's single-family home sales program.

The agency's mission is two-fold: The first part is to get maximum return on investment in order to replenish the mortgage lending fund. The second is to work to improve communities. So when HUD takes over a home it doesn't just sell it off immediately for whatever the market will bear.

Homes are first offered to approved non-profit organizations, mostly in inner-city neighborhoods, at a 50 percent discount to their appraised values. The non-profits then rehabilitate and resell them.

Any properties not picked up by the non-profits are then offered to police officers and teachers at a 10 percent discount. HUD also recently began giving first shot at homes coming into the system to people made homeless by Hurricane Katrina at the same 10 percent discount.

If, after five days, no teacher, officer or Katrina victim makes an offer, HUD puts the properties on auction for the general public. At that point only buyers who intend to live in the house may bid.

After 10 days more, however, anyone, including investors, can join the bidding. Bidders may lowball the listing with a bid as minimal as they like but most of the properties do carry an undisclosed minimum.

In some stronger housing markets, winning bidders often offer more than the appraised value but in depressed markets the winning bids can be substantially less. The winning bids average about 98 percent of the appraised value, according to Maggiano.

She reports HUD sold 57,930 homes during the past 12 months, with an average selling price of about $79,000. "That makes HUD the largest seller of single family real estate in the United States," says Maggiano.

Today, there are a total of more than 28,000 HUD homes available. Although they come from nearly every state, the really hot markets provide little of HUD's inventory. Homes in California and the rest of the Southwest simply don't make it ithrough the foreclosure process; they're snapped up in the early stages of delinquency.

But the Midwest and South, in particular, have lots of listings, with Michigan, Illinois, North Carolina and Texas leading the pack, according to Maggiano.

"We used to have a very large inventory in Florida," says Maggiano. "No more."

HUD sells everything "as is" and tries to include as much information about the state of each property as possible, including an environmental compliance report and a fairly extensive property condition report. But HUD provides very little description of the homes assets and features. For that, house-hunters should visit the property itself.

It's advisable to get a thorough inspection done before buying. Not only will the inspection reveal just how many repairs and how much it will cost to make a place livable, but the rehab expenses may be added into the mortgage loan if uncovered before closing.

And while many homes need extensive repairs others come to the market in very good shape.

"We have some really quite lovely homes for sale," says Maggiano.