July reports drop in pending home sales, but increase from 2010

The National Association of Realtors' latest Pending Home Sales Index reported pending home sales declined in July, but remained above levels from July 2010. All regions of the United States experienced declines except for the West, which continues to experience the highest level of sales activity in the nation.

According to the data, the index fell 1.3 percent to 89.7 in July from 90.9 in June, but reported 14.4 percent higher activity than the 78.4 index in July 2010. Lawrence Yun, NAR chief economist, said sales activity is underperforming because mortgage underwriting standards are too stringent and are keeping buyers out of the market, while not all sales contracts are resulting in home sales.

"Other market frictions need to be addressed, such as assuring that proper comparables are used in appraisal valuations, and streamlining the short sales process," Yun said. "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."

While the West index rose 3.6 percent in July, the South fell 4.8 percent, the Midwest slipped 0.8 percent and the Northeast declined 2 percent from June. But despite the Northeast's monthly decrease in pending home sales, residential home sales in New Hampshire rose 29 percent in July 2011 over July 2010, according to the New Hampshire Association of Realtors.

The latest housing data shows 1,048 homes were sold in July compared to 811 sold in June 2010. The New Hampshire Business Review reported that the federal first-time homebuyer tax credit that offered $8,000 to consumers expired on June 30, 2010, leading July's sales numbers to drop last year.

Tom Riley, president of the New Hampshire Association of Realtors, said the year-to-year numbers will not be very useful because of the expiration of the federal tax credit.

"The further along we get in the year, the more relevant and telling these comparisons become," Riley said.  

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