The Pending Home Sales Index of existing U.S. homes fell 2.6 percent in June. Not surprising, these are the first numbers that do not reflect the added stimulus of the homebuyer tax credit. The Index, based on contracts signed in June, is 18.6% below June 2009.

Lawrence Yun, NAR chief economist, said lower home sales are expected in the short term. “There could be a couple of additional months of slow home-sales activity before picking up later in the year, provided the job market continues to improve,” he said. “Over the short term, inventory will look high relative to home sales. However, since home prices have come down to fundamentally justifiable levels, there isn’t likely to be any meaningful change to national home values. Some local markets continue to show strengthening prices.”

Regionally, The PHSI in the Northeast dropped 12.2 % in June, 25.4 % lower than June 2009. In the Midwest the index fell 9.5 %, 27.8 percent lower than 2009. Pending sales rose 3.7 % in the South, still 13.3% below June 2009, and the West saw the index fall 0.2 %, 14.2 % below a year ago.

With some positive signs followed by some negatives, it seems we are bumping along the road to economic recovery.   Mortgage purchase applications increased 2 percent last week according to The Mortgage Bankers Association, while refi’s were down 4%. Continuing worries about unemployment  helped keep confidence down. The Fed’s Beige Book survey of economic conditions shows that while some major market areas are improving including New York and Chicago, it does see any great improvement for the near future. The latest  S&P/Case-Shiller home price indexes show  the May 20-city index was up 4.6% from  a year ago and the 10-city measure was up 5.4%. new-home sales jumped 23.6% in June but that followed a 36.7% drop in May.   

This Week’s Real Estate Insight:

With the drop in prices and interest rates in the mid 4′s, affordability is the best it has ever been, but unemployment has left millions unable to qualify for a mortgage. Until job creation picks up, many people will not feel confident enough to take on a mortgage.