Existing-home sales dipped 0.8% to a seasonally adjusted annual rate of 5.05 million in April and down 12.9% from the 5.8 million pace one year ago, according to the National Association of Realtors. NAR said home sales were elevated in late spring of last year because of the expiring homebuyer tax credit. NAR Chief Economist Lawrence Yun said home sales should be stronger given affordability, new job creation and pent-up demand. "Although existing-home sales are expected to trend up unevenly through next year, unnecessarily tight credit is continuing to restrain the market, along with a steady level of low appraisals that result in contract cancellations," Yun said. An additional survey of members found 11% reported a contract was canceled in April because an appraisal came in below the price negotiated between the buyer and the seller. Another 10% reported at least a delay, and 14% said they eventually renegotiated to a lower sales price. "[E]xisting guidelines from Freddie Mac and Fannie Mae must be fully implemented so all appraisals are done by valuators with local expertise," said NAR President Ron Phipps said. Both Yun and Phipps said the restrictive loan underwriting standards are holding back the market. "We want to ensure that qualified buyers will be able to own their property on a sustained basis from a sound credit evaluation, but banks needn’t be so stingy as to only lend to those with the highest credit scores," Phipps said. The national median home price in April was $163,700, a 5% drop from one year ago. Distressed homes sold for a 20% discount and accounted for 37% of all sales, NAR said. The total housing inventory stood at 3.87 million existing homes for sale on the market, a 9.9% increase from one month ago. At the end of April, the market held a 9.2-month supply of homes. A normal market usually holds a six-month supply. Phipps said recent proposals and regulations coming from Washington could further restrain the market already experiencing low sales volumes and rising inventory. He specifically pointed to risk-retention rules, which require lenders to maintain 5% of the credit risk on mortgages sold to the secondary market — unless the loan fits a variety of requirements such as a 20% down payment. "One of the most damaging proposals would effectively raise down payment requirements to 20%, which would slam the brakes on the housing market," Phipps said. "What we need to do is simply return to the sound standards that were in place before the introduction of risky mortgage products." Write to Jon Prior. Follow him on Twitter @JonAPrior.