An index that measures pending sales of resale homes dropped in July to its lowest level since September 2001, the National Association of Realtors reported today.
The Pending Home Sale Index, which is based on signed contracts for transactions that have not yet closed, dropped 16.1 percent in July compared to July 2006, to a reading of 89.9. That compares to an index rating of 89.8 in September 2001. Pending sales are typically finalized within one or two months of signing, the association reported.
An index score of 100 is equal to the average level of contract activity for the full year in 2001, which was the first year to be examined in the association’s index and the first of five consecutive record years for existing-home sales.
Lawrence Yun, NAR senior economist, said in a statement, “It’s difficult to fully account for mortgage disruptions in the index, and our members are telling us some sales contracts aren’t closing because mortgage commitments have been falling through at the last moment.”
He also said that there are problems with jumbo loans and for subprime borrowers, “but there are no serious problems for the majority of buyers who qualify for conventional financing or (Federal Housing Administration-insured) loans.”
The Pending Home Sales Index, based on contracts signed in July, fell 12.2 percent to a reading of 89.9 in July from the June index of 102.4, and was 16.1 percent lower than July 2006 when it stood at 107.1.
Regionally, the July index dropped 21.8 percent in the West, 15.8 percent in the Midwest, 15.2 percent in the South and 10 percent in the Northeast compared to the same month last year.
The index is based on a national sample that typically represents about 20 percent of transactions for existing-home sales, the association noted.