WASHINGTON – The number of contracts signed for existing homes in July fell 12.2 percent from their June level, after rising 5.0 percent a month earlier, according to a report today by the National Association of Realtors.
Analysts had expected a decline of 2.2 percent, according to the median prediction in Bloomberg News survey of 26 economists. (Their estimates ranged from a decline of 4 percent to an increase of 1.5 percent.)
Declines were seen in every region, with pending resales dropping 21 percent in the West, 13 percent in the Midwest, 12 percent in the Northeast and 6.6 percent in the South. Compared with July 2006, pending home sales fell 16 percent nationwide, the NAR reported.
“Our members are telling us some sales contracts aren’t closing because mortgage commitments have been falling through at the last moment,” said Lawrence Yun, the trade group’s senior economist. “There are continuing issues for subprime borrowers, but there are no serious problems for the majority of buyers who qualify for conventional financing.”
But,Yun added, in recent weeks, the market appears to have been “stabilizing somewhat.”
That view was confirmed by the Mortgage Bankers Association’s report today that loan applications increased last week by 1.3 percent.
The trade group’s U.S. mortgage applications index rose to 633.9 points last week from the previous week’s one-month low of 615.2, the MBA said.
Applications for loans to purchase a house rose 0.4 percent, while refinance applications rose 2.3 percent, the MBA said. Its weekly survey, launched in 1990, covers about half of all U.S. retail residential mortgage originations.
Meanwhile average rate on a 30-year fixed loan rose to 6.42 percent last week from 6.41 percent the week before, the MBA said. The rate on a one-year adjustable-rate mortgage (ARM) rose to 6.52 percent, from 6.51 percent the week before, exceeding standard-loan rates for a second consecutive week. That helped drive down ARMs to 12.6 percent of applications, the smallest share in more than four years, the MBA said.
“Given the intensity of the recent interruption in mortgage markets, housing declines will likely intensify again in the fourth quarter,” Peter Kretzmer, a senior economist at Banc of America Securities LLC in New York, had told Bloomberg News before the MBA report.
“The housing market is bad and is going to stay bad for some time,” agreed Zach Pandl, an economist at Lehman Brothers Holdings Inc. in New York. Speaking to Bloomberg News about the NAR pending home sales report, he added: “This number does not look good for existing home sales for August.”
Sales of new homes – 15 percent of the market, according to Bloomberg News – rose in July, the U.S. Census Bureau said Aug. 24 (READ MORE), while existing home sales were steady, according to an NAR report last week (READ MORE).
The National Association of Realtors is the nation’s largest trade association, with more than 1.3 million members in all aspects of residential and commercial real estate. To learn more, visit www.realtor.org.
The Mortgage Bankers Association, also based in Washington, D.C., is a trade group representing the real estate finance industry. Additional information, including the MBA’s Weekly Application Survey, is available at www.mortgagebankers.org.
