Sales of previously owned homes unexpectedly fell in June to touch a seven-month low as cancellations of pending contracts surged, an industry group said on Wednesday.

COMMENTS:

TOM PORCELLI, U.S. ECONOMIST, RBC CAPITAL MARKETS, NEW YORK

It's a disappointment on the face of it, however, as we've continued to highlight, given the supply and demand balance I don't think we should be all that surprised.

On the face of it the number may not be as bad as the headline suggests. The decline came in condos. Single family housing was relatively flat on the month.

A couple of interesting nuggets from within the report: First-time buyers actually slipped to 31 percent to 36 percent. That's interesting because first-time buyers tend to gravitate toward condos. Also, if you look at what prices did, they rose on a month over month basis pretty significantly, and that could because first-time buyers slipped.

We're not expecting all that much from this sector anyway this year.

CARY LEAHEY, ECONOMIST, DECISION ECONOMICS, NEW YORK

It's like a broken record. The good news is bad news. It's steady and it's been steady for five months. But the pace is running well below historical averages. It's disappointing. But the market knows that the housing recovery is going to be extremely slow and they're fixated on the sovereign debt issues. So it won't generate much interest.

VIMOMBI NSHOM, ECONOMIST, IFR ECONOMICS, A UNIT OF THOMSON REUTERS

Sales of previously-owned homes surprised to the downside, falling to an annualized sales rate of 4.77mln homes. This contradicts pending sales figures in last month's report which published the first take on May's numbers -- a moderate recovery of 8.2% after contracts fell 11.3% -- implying these buyers would close the deal in the following month. That report undoubtedly encouraged economists to expect a small rise in closed contracts (market forecast 4.9mln), however the number of cancellations -- buyers that back out of the contract -- shot up to 16% in June compared to the habitual norm of less than 10%. June's numbers reflect a continued slowing in activity that is adding to the slack in the housing market making their promising Spring season unimpressive. In the first half of the selling year, EHS' losses have proven more prevalent than the gains. Not only has EHS' monthly movement shown four declines, the declines are steeper than the gains as we can see since sales have yet to climb back to the 5.4mln sales pace posted in the first month of the year).