NAR: resales likely to fall in coming months

Sales of existing homes are likely to fall in the coming months as turmoil in mortgage markets continues to affect housing, according to the National Association of Realtors’ Pending Home Sales Index.

The index, based on contracts signed in July, fell to 89.9 for that month, down 12.2 percent from the June index of 102.4 and down 16.1 percent from the July 2006 index of 107.1.

“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,” Lawrence Yun, NAR senior economist, said.

The index in the Midwest dropped to to 80.4 in July, down 13.1 percent from June and down 15.8 percent from July 2006.

She’s a relatively new one, as indexes go, which makes interpreting the Pending Home Sales Index slightly tricky. The NAR points out that at this point, annual changes in the index are more closely related to actual market performance than month-to-month comparisons. As the relatively new index matures and seasonal adjustment factors are refined, the month-to-month comparisons will become more meaningful.

An index of 100 is equal to the average level of contract activity during 2001, which was the first year to be examined – and the first of five consecutive record years for existing-home sales.

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