Average Lehigh Valley home prices rose modestly in April, but sales continued to fall and the amount of time it took to sell houses lengthened.

It was the 11th consecutive month of falling home sales, compared year-over-year, according to statistics released this week by the Lehigh Valley Association of Realtors. April's results show a continuation of slowing trends that started last year after three years of a boom market.

The market for homes in the Valley remains relatively healthy, with prices for existing homes rising 2.3 percent on average last month to $222,000.

But the high number of homes for sale is slowing the pace of transactions, and possibly depressing prices. New listings rose 25 percent last month to 1,713 units, or about three times the number of homes sold.

"Our inventory is skyrocketing," said Loren Keim , who owns Century 21 Keim Realty in Allentown. "There are a lot of reasons for that. [Sellers] think this might be the end of the good market. The good market ended last spring."

Speaking at a "Real Estate Today" conference Tuesday at Lehigh University, Keim said the number of pending sales -- a key measure of current sales activity -- has been dropping. Pending sales, which represent signed sales contracts that have not closed, fell 17 percent last month.

The current market contrasts sharply with past slowdowns, Keim said. The Lehigh Valley is creating jobs, and mortgage rates remain near historic lows. In the past, the housing market has stalled when mortgage rates were high and the number of jobs in the area was declining.

"It shouldn't be this way," he said.

Real estate agents say the market remains robust for homes in downtown Allentown and Bethlehem, and for suburban properties that are priced at $250,000 or less. But higher-end homes are taking much longer to sell, compared to past years.

Home sales fell last year for the first time in at least 10 years. New listings outpaced home sales by nearly two-to-one last year, according to the Realtors association.

The high number of homes on the market, however, has been a boon for prospective buyers, who have the freedom to be choosier when they look at homes and make offers below asking price. Many real estate agents and economists say it's a needed correction to the fast-paced markets of 2005 and 2006 when homes sold in a matter of days or weeks.

Average prices for existing homes have risen 10 percent or more for each of the past four years. The market has been bolstered by strong demand from buyers moving to the Valley from more expensive towns in New York and New Jersey. The newcomers consider the Valley's home prices a bargain, particularly since they tend to keep their old, high-paying jobs.

Some real estate agents say the influx of New York and New Jersey buyers is slowing. The shift in demand stems in part from rising gas prices, and the strain of the commute, said Connie Ulans, with A. R. Ulans Realty in Allentown.

"What I have heard personally is, "Connie, I can't take the drive. I won't have as much house but I won't have to get up at 4:30 in the morning,' " Ulans said.

New homes have proven a big draw for newcomers. The average price of a new four-bedroom home rose 15 percent in April to $530,000, based on 8 sales. It's only the second month that the average new home price rose above $500,000, according to LVAR statistics.

National builders have said they are facing a glut of unsold homes. At the conference Tuesday, an executive with the National Association of Home Builders said there are 1 million to 1.5 million vacant new homes. The official, senior staff member David Crowe, said the statistic is "troubling."

"Something's got to give. The economy can't sustain itself with this number of homes on the market," he said.

Builders with unsold houses in new subdivisions typically don't lower prices because the other residents have paid a given price for their homes. But they can offer other incentives. The organization, which regularly surveys the nation's 30 largest home builders, said 60 percent of builders -- an all-time high -- are offering options such as outdoor decks at no cost. Half of the home builders are paying buyers' closing costs.

The organization is a federation of state and local groups, including the Lehigh Valley Builders Association. Chuck Hamilton, the local association's executive officer, said there are not as many unsold homes here because local companies construct homes based mostly on orders from customers, rather than potential future demand.

Nonetheless, he said some of the national builders with subdivisions in the Lehigh Valley have had to offer incentives here. The local association does not publish statistics.

Hamilton said the impact of changing market conditions has been significant, and "almost all builders have noticed a slowdown in demand."

Local real estate agents are beginning to see the impact of higher default rates among sub-prime loans. Mortgage companies that offer subprime loans lend money to people with bad credit or varying income. As more people have defaulted on these loans, some sub-prime lenders have gone out of business.

The rash of failing lenders has prevented some transactions from closing in the Lehigh Valley. Keim said at his firm's Allentown office, 18 sales fell through in February because the lenders involved had closed, or no longer offered the mortgages the clients had qualified for.

jeanne.bonner@mcall.com

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