Pending Home Sales Rise 5.2% in July

Posted by Emily Ray-Porter Group on Thursday, September 2nd, 2010 at 11:43am.

 

By Alan Zibel, AP Real Estate Writer

WASHINGTON — The number of buyers who signed contracts to purchase previously occupied homes increased in July but remained well below last year's levels.

The National Association of Realtors said Thursday its seasonally adjusted index rose 5.2% from a month earlier to a reading of 79.4. Economists surveyed by Thomson Reuters had expected the index would fall to 74.9.

The index was still down 19% from the same month last year. June's reading was the lowest on records dating to 2001. It was revised slightly downward to 75.5.

The index provides an early measurement of sales activity because there is usually a one- to two-month lag between a sales contract and a completed deal.

High unemployment, weak job growth and tight credit have hurt the housing market. Sales picked up in the spring when the government was offering tax credits of up to $8,000. However, once the tax credits expired on April 30, sales plunged.

"The recovery looks to be a long process, " Lawrence Yun, the Realtors' chief economist, said in a statement. "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."

The sales report was driven by a nearly 12% jump in the West and a more than 6% increase in the Northeast. Sales were up 4% in the Midwest and about 1% in the South.

The modest rise came as mortgage rates have been falling to the lowest level in decades.

Mortgage buyer Freddie Mac said Thursday that the average rate for a 30-year fixed loan was 4.32% this week, down from 4.36% last week. That's the lowest since Freddie Mac began tracking rates in 1971.

The average rate on 15-year fixed loan dropped to 3.83% from 3.86% the previous week. That's the lowest on records starting in 1991.

Rates have been falling since spring as investors shift money into safer Treasury bonds. That has lowered their yields, which mortgage rates tend to track.

Besides low rates, many buyers have been scared away by the prospect that home prices could start to turn downward again — something that most analysts expect.

The pending home sales index tracks signed sales contracts for previously occupied homes. A reading of 100 is equal to the average level of sales activity in 2001, when the index started.

 

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