For the first time in three months, pending sales of previously-owned homes dropped in July, signaling yet again that the housing recovery is a long way from getting unstuck. Although pending home sales rose by 2.4 percent in June, July's 1.3-percent decrease was more than the 1 percent drop economists in a Bloomberg survey said they expected for the month.
The National Association of Realtors, or NAR, bases its index of pending home sales on signed contracts and considers an index of 100 to be a "healthy" housing market. The index now stands at 89.7, but it's still up 14.4 percent from a year ago in July.
Regionally, the South led the fall, with a 4.8-percent decline, while sales in the West actually increased by 3.6 percent. The Midwest slipped 0.8 percent.
Earlier in the month, NAR said sales of previously owned homes (tracked at closing) reached a nine-month low in July.
Lawrence Yun, chief economist at the NAR, said in a press release that the market can improve if mortgage underwriting standards are addressed. He added 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 is now a question of lending standards and consumers having the necessary confidence to enter the market."
In other economic news, consumer spending, which makes up two-thirds of the economy, rose by 0.8 percent in July. But with unemployment still hovering around 9 percent and a glut of foreclosed homes poised to go on the market, many analysts believe it will be years before we see a housing recovery.
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