Pending home
sales declined in July but remain well above year-ago levels, according to the
National Association of REALTORS®. All regions show monthly declines except for the West, which continues
to show the highest level of sales contract activity.
The Pending Home Sales Index, a forward-looking indicator based on
contract signings, slipped 1.3 percent to 89.7 in July from 90.9 in June but is
14.4 percent above the 78.4 index in July 2010. The data reflects contracts but
not closings.
Lawrence Yun, NAR chief economist, said
sales activity is underperforming. “The market can easily move into a healthy expansion if mortgage
underwriting standards return to normalcy,” he said. “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.”
The PHSI in the
Northeast declined 2.0 percent to 67.5 in July but is 9.7 percent above July
2010. In the Midwest the index slipped 0.8 percent to 79.1 in July but is 18.8
percent above a year ago. Pending home sales in the South fell 4.8 percent to
an index of 94.4 but are 9.5 percent higher than July 2010. In the West the index rose 3.6
percent to 110.8 in July and is 20.6 percent above a year ago.
“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.”
Source: NAR
