Pending Home Sales Hit 6-Year Low

WASHINGTON, D.C. (AP) — Pending sales of existing homes fell in July to the lowest level in nearly six years as the mortgage market’s troubles made it tough for many borrowers to finalize home purchases.

The National Association of Realtors said its index of pending home sales for July fell 16.1 percent from a year ago and 12.2 percent from the prior month.

July’s reading of 89.9 was the second lowest ever for the index and its lowest since September 2001, when the economy was jolted by the terrorist attacks. A reading of 100 is equal to the average level of pending sales activity in 2001, when the index began.

Lawrence Yun, the trade group’s chief economist, said in a statement that some home purchases are not closing because mortgages “have been falling through at the last moment.”

Mr Yun called the problem temporary, and related to jumbo home loans above $417,000 that cannot be packaged into securities sold to investors by government-sponsored mortgage giants Fannie Mae (FNMA) and Freddie Mac (FHLMC).

With defaults rising among borrowers with weak credit, lenders have backed off from all but the safest mortgages.