July pending home sales touch two-year high

WASHINGTON Wed Aug 29, 2012 12:22pm EDT

A U.S. flag decorates a for-sale sign at a home in the Capitol Hill neighborhood of Washington, August 21, 2012. REUTERS/Jonathan Ernst

A U.S. flag decorates a for-sale sign at a home in the Capitol Hill neighborhood of Washington, August 21, 2012.

Credit: Reuters/Jonathan Ernst

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WASHINGTON (Reuters) - Contracts to buy previously owned homes rose to their highest level in more than two years in July, an industry group said on Wednesday, suggesting the housing market recovery was gaining traction.

The National Association of Realtors said its Pending Home Sales Index, based on contracts signed in July, increased 2.4 percent to 101.7 - the highest level since April 2010 and shortly before the deadline for the home buyer tax credit.

Economists polled by Reuters had expected signed contracts, which become sales after a month or two, to rise 1.0 percent after declining 1.4 percent in June.

The report was the latest to show momentum in housing market recovery, with gains in home construction and sales and prices.

Pending home sales were up 12.4 percent in the 12 months to July.

"All regions saw monthly increases in home-buying activity except for the West, which is now experiencing an acute inventory shortage," said NAR chief economist Lawrence Yun.

Contracts in the Northeast gained 0.5 percent last month and increased 3.4 percent in the Midwest. In the South, contracts rose 5.2 percent. The West saw a 1.7 percent drop in contracts last month.

(Reporting by Lucia Mutikani; Editing by Chizu Nomiyama)

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