After dropping a whopping 30% m/o/m in May after the expiration of the tax credit, Pending Home Sales unexpectedly fell by 2.6% in June vs a forecasted rise of 4%. The drop was led by the Northeast and the Midwest regions with a tiny fall in the West of .2% and a 3.7% gain in the South, the two areas with the most foreclosures and thus cheaper homes. While weaker than expected, the softness in the resale market is not a surprise to anyone as the crutch of $8000 for a buyer is no longer there. The question is what happens after the hangover as potential buyers weigh the benefit of low prices and mortgage rates with the risk of job and economic uncertainty. Also of influence is the new world of tight lending standards in which we live that has impacted the amount and pace of sales.
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