Pending home sales jump 7.4% in August

The National Association of Realtors just came out with its August pending home sales data. Pending sales rose 7.4%, putting the index at 93.4. That was far better than expectations for a 1.3% decline, and up 8.8% from August 2007. Regionally, the pending sales index jumped 18.4% in the West, 8.4% in the Northeast, 3.6% in the Midwest, and 2.3% in the South.

Normally, I'd take this as surprisingly good news. It appears that some of the government efforts to drive mortgage rates lower, plus lower home prices in many markets, are encouraging some buyers to step up and bottom fish.

The only problem is that many of these "pending" sales won't turn into "closed" sales as long as the credit markets remain locked up. Buyers just won't be able to get the financing they need, even if they want to purchase a home. We've also seen the economy deteriorate in the past several weeks, potentially setting the stage for weaker numbers going forward.