Pending home sales of existing homes unexpectedly jumped 5.2 percent in July based on the forward-looking index by the National Association of Realtors, surprising analysts and possibly signaling a bottom to the post-tax credit freefall in the housing market.
The NAR’s pending home sales index rose to 79.4 percent, from a downwardly revised 75.5 in June.
But the index is 19.1 percent below that of July 2009, when it was at 98.1.
The data is based on contracts and not closings. There is normally a lag time of one or two month before they count as existing home sales.
The national index had fallen 29.9 percent in May and another 2.8 percent in June.
Expiration of the expanded homebuyer tax credit program on April 30 sent home sales activity into a sharp downward trend, fueling fears of a double-dip recession and slowing overall economic recovery.
Obama Administration officials have suggested that renewing the tax credit is under consideration.
“Home sales will remain soft in the months ahead, but improved affordability conditions should help with a recovery,” said Lawrence Yun, NAR chief economist. “But the recovery looks to be a long process. Home buyers over the past year got a great deal, and buyers for the balance of this year have an edge over sellers.”
Buyers also have historically low mortgage rates on their side. “Affordability could reach a generational high in the second half of the year,” Yun said. But he cautioned that most lenders still have tough lending standards in place.
“The loan underwriting standards are tighter, but home buyers can improve their chances of getting a loan by staying well within their budget,” Yun said.
