Interest Rate Roundup

Wednesday, August 01, 2007

Pending home sales pop

Well, what do you know -- pending home sales popped sharply in June, according to the National Association of Realtors. The details:

* Pending sales climbed 5% between May and June, versus forecasts for a 0.5% decline. That was the first gain in four months and the largest one-month rise since March 2004.

* Regionally, sales rose in all four areas with an 8.6% rise in the West being the strongest showing and a 3.1% gain in the Northeast being the weakest.

* On a year-over-year basis, the seasonally adjusted pending sales index was still down 8.6% nationwide.

Is this good news? In one sense, yes. The pending sales rise was definitely not what the market was looking for. But there's one major problem: What happens if many of these PENDING home sales fail to CLOSE? The mortgage markets have been in a state of uproar recently. Mounting losses have caused some lenders to cut back on their suite of mortgage programs, and driven others out of the business entirely. That means some borrowers who sign contracts to buy existing homes may ultimately fail to close. We'll have to keep a close eye on actual closings over the coming few months to see whether housing market conditions are truly improving.


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