The National Association of Realtors' gauge of future home sales rose 5.2% in July after falling 28% since April when two federal tax credits for home buyers expired.
Although the increase in future home sales might be viewed as a positive, NAR economists are not optimistic about the market for the second-half and revised its forecast downward, predicting a bigger drop in third quarter sales.
NAR's pending sales index rose to 79.4 in July, up from 75.5 in June. The July index is 19% below the level of a year ago.
The seasonally adjusted index is based on newly signed sales contracts on existing homes. These mortgages should close in the next month or two.
NAR economists now expect existing home sales will plunge nearly 27% in third quarter (from 2Q), but rebound by 20% in the fourth.
That rebound would push sales up to a 4.94 million annual rate on a seasonally adjusted annual rate in the fourth quarter. NAR forecasts a 4.09 million rate for 3Q.
A month ago, NAR had forecast a sales rate of 4.55 million for 3Q, and 5.27 million rate for 4Q.
The trade group's chief economist Lawrence Yun expects a long recovery for housing. "Home sales will remain soft in the months ahead, but improved affordability conditions should help with a recovery," he said. "For those who bought at or near the peak several years ago, particularly in markets experiencing bubbles, it may take over a decade to fully recover lost equity."
