Pending Home Sales Up 3% in July

A leading indicator of future home sales rose 3.2% in July to a level not seen since the summer of 2007, according to the National Association of Realtors. The NAR pending sales index hit 97.6 in July, up from 94.6 in June. The index has risen for six straight months, according to NAR chief economist Lawrence Yun, as homebuyers take advantage of very affordable prices and the $8,000 first homebuyer tax credit. NAR estimates that 1.8 million to 2.0 million first-time homebuyers will use the tax credit before it expires at the end of November. The tax credit, the group believes, will generate approximately 350,000 sales that would not have happened without it. NAR, the National Association of Home Builders and other housing groups are urging Congress to extend and expand the tax credit this fall. "Unless the tax credit is extended no one should be surprised to see home sales drop in the first quarter of next year," Mr. Yun said. However, NAR is forecasting that existing home sales will pick up again in the second quarter and be stronger in 2010 than this year even without the tax credit. The economic recovery appears "fragile," a NAR spokesman said. An extension of the tax credit will provide a sounder footing for the housing market, he said.