Pending Home Sales Slip Back in July

National Association of Realtors revealed a 1.3 percent decline in the pending home sales index in July, to 89.7. This follows increases in PHSI over the previous two months that were not consistent with the steady decline observed in existing home sales (closed sales) data.
Courtesy of NAHB

Pending home sales (contract signings on existing homes) slipped back in July, with housing demand slowed by the weak economic conditions and falling consumer confidence.

Across the regions, declines were observed in pending home sales index in the South (-4.8 percent), Northeast (-2 percent) and Midwest (-0.8 percent). However, conditions in the West continued to improve, with a 3.6 percent increase in the region’s PHSI—the third consecutive increase for this region.

National Association of Realtors maintains a positive outlook, noting that 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’s now a question of lending standards and consumers having the necessary confidence to enter the market.

Current conditions are favorable for home buying. Expect it to be some time before there is a notable loosening in bank lending standards due to the current weak economic environment. Existing (and pending) home sales should bounce around current levels for the remainder of the year, before beginning to pick up in 2012.

– Courtesy of NAHB