The National Association of Realtors reported yesterday that pending home sales fell by 4.7% in May after surprise uptick the month prior. Economists had expected a decline of 2.8%. NAR's "Pending Home Sales Index" fell to 84.7 from 88.9 in May and has fallen 14% since May 2007. NAR chief economist Lawrence Yun said, "...the data confirms we are not out of the woods by any means."
Despite this unwelcome news, a sign of hope could be found in the Mortgage Bankers Association release of weekly mortgage application activity. Despite a shortened week due to the 4th of July holiday, mortgage application activity rose 7.5% last week raising the MBA's application index to 513.4 from 477.7 the week prior. This is positive news considering mortgage applications typically precede real estate purchase contracts. I expect we will see a rebound in NAR"s "Pending Home Sales Index" in July as more buyers take advantage of low interest rates and the bargains to be found in the real estate marketplace.
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