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Pending home sales for July unexpectedly rose 5.2 percent from the previous month, reported the National Association of Realtors (NAR). Economists surveyed by Bloomberg forecast a 1 percent decline.
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This increase comes after sharp declines of 2.6 percent and 29.9 percent in the prior two months. Despite the increase, July's pending home sales is still 19.1 percent below the July 2009 level.
This increase in pending home sales, which is a forward-looking indicator calculated by contracts signed in July, is nevertheless encouraging after last week's dismal housing data. Last week, reports showed existing and new home sales for July plunged to record lows.
July's rebound “offers some hope that the post-tax credit floor in housing activity is within sight,” said Paul Dales, U.S. economist at Capital Economics.
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“Home sales will remain soft in the months ahead, but improved affordability conditions should help with a recovery,” said Lawrence Yun, NAR chief economists.
Yun said housing affordability could reach a “generational high” in the second half of this year because of low mortgage interest rates.
Nevertheless, Yun expects the recovery to be “a long process” and said home buyers who bought at the peak several years ago may have to wait over a decade to recover lost equity.
