Increase in mortgage loans likely with pending home sales on the rise

08.06.09
By James Conroy

It appears that the number of people looking for a home loan is on the rise as a new report finds that pending home sales rose for the fifth straight month in June while applications for mortgages rose for the week ending July 31.

According to the National Association of Realtors (NAR), pending home sales rose 3.6 percent in June - the first time in almost six years that the figures rose for five straight months. In a sign that the housing market may be getting back on track, the NAR says June's numbers were a 6.7 percent increase over the same time last year.

The South saw its figures increase the most with pending home sales rising 7.1 percent in June - an 8.9 percent increase over June 2008 numbers. By contrast, the Midwest saw only a 0.8 percent increase from May to June but saw its year-to-year numbers rise 11.6 percent.

Analysts believe the strong numbers on pending home sales signal the possible growth in existing home sales in the next few months. Millan L. B. Mulraine, an economics strategist at TD Securities, wrote in a research note that the NAR report is a good sign for already growing existing home market.

"[W]ith pending home sales providing a fairly good gauge on future existing home sales activity (with 80 percent of pending sales eventually turning into actual sales within two months), we expect the recent gains in existing home sales to gain further traction in the next month or so, based solely on this report," wrote Mulraine.

Weekly figures released Wednesday from the Mortgage Bankers Association find that mortgage loan applications increased a seasonally adjusted 4.4 percent last week - an 18 percent increase over the same week in 2008.

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