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Pending-Home Sales Index Recovers in July: NAR

In another positive sign for the housing sector, the Pending Home Sales Index (PHSI) rose 2.4 percent in July to 101.7, its highest level since April 2010, the ""National Association of Realtors"":http://www.realtor.org/ reported Wednesday.

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Economists had expected a 1.0 percent increase to 100.3. The July increase more than reversed an unexpected 1.4 percent drop to 99.3 in June.

The jump in the PHSI Index in July follows a string of positive housing indicators: increases in existing and new home sales in July, increases in the Case Shiller Home Price Indexes in June ├â┬ó├óÔÇÜ┬¼├óÔé¼┼ô including the first year-over-year gains in those indexes in almost two years ├â┬ó├óÔÇÜ┬¼├óÔé¼┼ô and continued increases in builder confidence in August and housing permits in July.

The only negatives in recent reports were a slight drop in housing

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starts in July and drops in the median price for existing and new homes in July.

The PHSI ├â┬ó├óÔÇÜ┬¼├óÔé¼┼ô a data point comparable to new home sales in that both are based on contracts, not completed transactions ├â┬ó├óÔÇÜ┬¼├óÔé¼┼ô has improved month-month for seven of the last 10 months and is 12.4 percent above the July 2011 level.

The index, according to the NAR, has improved year-over-year for 15 straight months. New home sales have improved year-year for 10 straight months and in July was up 25.3 percent year-over-year.

The PHSI rose in three of the four census regions, falling only in the West where it slipped 1.7 percent to 109.9. The index improved 0.5 percent in the Northeast to 77.0 in July, 3.4 percent in the Midwest to 97.4, and 5.2 percent in the South to 111.

Regional indexes are up year-over-year in all four regions led by a 20.2 percent gain in the Midwest, 15.6 percent in the South, 13.4 percent in the Northeast and 1.3 percent in the West.

""Lawrence Yun"":http://www.realtor.org/bios/lawrence-yun, NAR chief economist, said the index would have increased further but for the lack of inventory. The West, he said, is experiencing ""an acute industry shortage.""

The index is based on a large national sample, representing about 20 percent of transactions for existing-home sales.

An index of 100 is equal to the average level of contract activity during 2001, which was the first year to be examined as well as the first of five consecutive record years for existing-home sales; it coincides with a level that is historically healthy.

About Author: Mark Lieberman

Mark Lieberman is the former Senior Economist at Fox Business Network. He is now Managing Director and Senior Economist at Economics Analytics Research. He can be heard each Friday on The Morning Briefing on POTUS on Sirius-XM Radio 124.
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