Pending Home Sales Fall Again in July

Pending home sales in July fell 3.2% over June and 6.8% from July 2007, according to the National Association of Realtors.

The NAR's Pending Home Sales Index, based off contracts signed during the month, registered 86.5 in July. The index serves as a forward-looking indicator for existing-home sales and the health of the U.S. housing market.

"Pending home sales are oscillating month-to-month, with the long-term trend essentially flat," said NAR Chief Economist Lawrence Yun. "Overly stringent lending criteria imposed by Fannie Mae (FNM Quote - Cramer on FNM - Stock Picks) and Freddie Mac (FRE Quote - Cramer on FRE - Stock Picks) in the past month no doubt held back contract signings."

Yun said despite the capital infusion from the federal government over the weekend, the housing market remains uncertain. "The economy is producing more, yet cutting jobs. A first-time home buyer tax credit and lower interest rates on newly conforming jumbo loans favors consumers, yet buyer confidence remains low," he said. "Even with the Treasury Department's direct intervention in the secondary mortgage market, it is unclear if we will go back to sound normal underwriting criteria, or if it will remain overly stringent."

Yun expects robust home-price growth in markets like Denver and Houston over the next two years. "Nationally, home sales are stable now but are expected to increase in coming quarters," he said.