Pending Home Sales Index Drops

Housing market fluctuations should continue in the coming months according to a National Association of Realtors index. Pending home sales were down nationally despite an increase in the Midwest. Northeast and West pendings dropped while the South was unchanged from June.

Lawrence Yun, NAR chief economist, said home sales continue to edge up and down.

“Pending home sales are oscillating month-to-month, with the long-term trend essentially flat,” he said. “Overly stringent lending criteria imposed by Fannie Mae and Freddie Mac in the past month no doubt held back contract signings.”

According to the group, even with the latest pullback, pending home sales have been fairly stable on a national basis for nearly a year, with dramatic local market differences continuing.

“Contract signings have been steaming ahead, nearly doubling in activity from a year before in several California and Florida markets,” Yun said. “The outer Washington, D.C., exurbs also are coming around very strongly. The Northeast region retreated following a robust gain in the previous month, and soft activity was observed in the broad midsection of America despite very affordable conditions.”

The PHSI in the Midwest rose 2.8 percent to 81.6 in July but remains 2.4 percent below a year ago. In the South the index was unchanged, holding at 93.7, but is 13.4 percent below July 2007. The index in the Northeast fell 7.5 percent to 73.6 in July and is 13.2 percent below a year ago. In the West, the index dropped 10.6 percent to 90.3 but is 6.5 percent higher than July 2007.

Source: National Association of Realtors