Signings were 19.6 percent above June's index reading, the low point since the housing bust. However, the index is still below 100, which is considered a healthy level. The last time it reached that point was in April 2010, the last month people could qualify for the new home buyer tax credit.
Contract signings are usually a good indicator of where the housing market is heading. That's because there's usually a one to two month lag time between a pending contract and a completed and closed transaction. However, there was an inordinately high number of cancelled contracts, as many buyers canceled after appraisals showed the properties were valued much lower than their initial bids.
"Therefore, the latest pickup in pending home sales and mortgage applications might not necessarily end up in a measurable pickup in mortgage closings and translate into an increase in existing home sales," said Yelena Shulyatyeva, an analyst at BNP Paribas.
The pace of sales varied from region to region. Signings fell 10.9 percent in the Northeast. They rose 2.7 percent in the South, 4 percent in Midwest and 7 percent in the West. High unemployment, strict lending standards, a large number of bank owned homes, and a record number of foreclosures are deterring would-be buyers, who fear home prices haven't reached the bottom.
Sales of previously owned homes fell last year to the lowest level in 13 years. Economists say it will be years before the housing market fully recovers. The rise in foreclosures has pushed the median price of previously occupied homes to its lowest point in nearly 9 years. New home purchases have fared even worse. Americans are on track to buy fewer new homes than in any year since the government began keeping data almost a half-century ago. Sales are now just half the pace of 1963 -- even though there are 120 million more people in the United States now.
Information provided by Associated Press