Pending home sales fell 12.2 percent in July

The National Association of Realtor's Pending Home Sales Index, based on contracts signed in July, fell to a reading of 89.9, the lowest since September 2001 when the index stood at 89.8.

The fall was much bigger than the 2 percent decline in the index economists were expecting for July and helped paint a bleaker picture of the housing market moving forward.

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, the realtor's economist Lawrence Yun said. But he added that while some concerns remain, since mid-August the market appears to be stabilizing.

Yun said the bulk of the problems are with jumbo loans and subprime borrowers, but there are no serious problems for the majority of buyers qualifying for conventional financing.

This index offers a good look into home sales moving forward because these pending sales contracts are usually finalized within one or two months. Compared to a year ago, the index was 16.1 percent lower.