July pending sales: hitting the wall

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News item: July pending home sales -- a preview of coming sales statistics -- were down sharply from June. CNN Money: ‘The meltdown in the mortgage market caused the biggest drop on record in July for pending home sales, taking the index down to the lowest level since the month that included the Sept. 11, 2001, terrorist attack.’

The National Assn. of Realtors tracks pending home sales through an index; its ‘Pending Home Sales Index’, based on contracts signed in July, fell 12.2% from the June index, and was 16.1% lower than July 2006.

This comment from NAR economist Lawrence Yun sure makes it sound like the group is trying to put pressure on lenders: “If lenders focus on the essentials of creditworthiness and adjusted valuations based on comparable sales, and ignore speculation on what might happen in the future, broader stabilization will come sooner rather than later.’

Our take: We expect another eight weeks or so of very weak readings on the housing market, all reflecting the near-collapse of the mortgage market in early August. We know that the housing market hit a wall in the first two weeks of August; the question is, what happened after that? And we won’t have clear answers to that for a while.

Hat tip: Tex
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