Pending home sales remain volatile, inch lower in July
The number of pending home sales in July fell 1.3% from June, but remain 14.4% above a year earlier, the National Association of Realtors said Monday. The huge trade group's pending home sales index measures the number of sales contracts signed each month. The index hit 89.7 in July, down from 90.9 in June yet well above the 78.4 of a year ago. Analysts polled by Econoday expected the NAR index to decrease 1% for July with estimates ranging from declines of 2% to an increase of 2.5%. Pending home sales climbed 2.4% in June on the heels of an 8.2% jump the prior month. "The market can easily move into a healthy expansion if mortgage underwriting standards return to normalcy," said Lawrence Yun, NAR's chief economist. "We also need to be mindful that not all sales contracts are leading to closed existing-home sales. Other market frictions need to be addressed, such as assuring that proper comparables are used in appraisal valuations, and streamlining the short sales process." On a regional basis, home sales in the northeast fell 2% to 67.5 in July, which is still up 9.7% from July 2010. The Midwest index edged down 0.8%, hitting 79.1 in July, up 18.8% from last year, while pending home sales in the south fell 4.8% to 94.4 on the index, but remained 9.5% higher than last year. Meanwhile, in the West, the pending sales index grew 3.6% to 110.8 in July and is 20.6% above year ago levels. "Looking at pending home sales over a longer span, contract activity over the past three months is fairly comparable to the first three months of the year, and well above the low seen in April," Yun said. "The underlying factors for improving sales are developing, such as rising rents, record high affordability conditions and investors buying real estate as a future inflation hedge. It is now a question of lending standards and consumers having the necessary confidence to enter the market," according to Yun. Write to: Kerri Panchuk.