Pending Homes Sales Fall to a Record Low

As the mortgage industry starts to fall apart, pending homes sales fell in July for the biggest drop on record. Pending home sales have not been this few and far between since 2001, when the terrorist attacks caused many to put house purchasing plans on hold. The pending home sales index keeps records of contracts that are in the works to purchase existing homes. The index fell over 12%, to a record low of 89.9. This is the second lowest reading for the index that begun in 2000-the first of course occurring in September of 2001. Economists expected a 2% decline in the latest readings, and were surprised when the index showed a 12% drop. According to the National Association of Realtors, the big drop isn’t a surprise seeing as the problems seen in the mortgage market in July and August are the largest issues seen since September 11, 2001.

Many are saying that is difficult to find all of the exact reasons for the drop in pending home sales, and many are saying that even those who have a pending contract are not able to close because mortgage commitments fell through at the very last moment.

Because of the record number of foreclosures this year, many lenders are starting to tighten their lending standards, and as a result many homeowners are not able to get loans. With the stricter lending regulations and lenders being more cautious who they lend do, it is certain that the pending home sales index will not recover immediately.