Pending home sales rose 5.2% in July from the month earlier but are significantly lower than the year ago, although home "affordability could reach a generational high in the second half of this year." The National Association of Realtors said its pending home sales index, which is based on contracts signed, was 79.4 for July, up from a revised 75.5 for June, yet 19.1% lower than 98.1 for the year earlier. The index declined 2.8% in June from May, when it plummeted 29.9% from the prior month. NAR attributed the drops in those months to the expiration of the federal homebuyer tax credit, which was April 30. Prospective homebuyers who signed a sales contract by April 30 had until Sept. 30 to close the deal and still get the government credit of $8,000 for first-time buyers and $6,500 for existing homeowners. "Home sales will remain soft in the months ahead, but improved affordability conditions should help with a recovery," NAR chief economist Lawrence Yun said. "But the recovery looks to be a long process. Homebuyers over the past year got a great deal, and buyers for the balance of this year have an edge over sellers. For those who bought at or near the peak several years ago, particularly in markets experiencing big bubbles, it may take over a decade to fully recover lost equity." Yun said "rock-bottom mortgage interest rates helped by the Fed's very accommodative monetary policy" may make homes more affordable through the end of the year. "The loan underwriting standards are tighter, but home buyers can improve their chances of getting a loan by staying well within their budget," Yun said. Still, homes sales plummeted in July and refinancing activity continues to drive increases in mortgage applications Write to Jason Philyaw.