Contracts to buy homes rose in June for second month

WASHINGTON (AP) - The number of people who signed contracts to buy homes rose for a second month in June. But the gain was not enough to signal a rebound in the weak housing market.

The National Association of Realtors reported Wednesday that its index of sales agreements for previously occupied homes rose 2.4 percent in June to a reading of 90.9. A reading of 100 is considered healthy by economists. The last time the index reached that level was in April 2010, the final month when buyers could qualify for a federal tax credit.

Contract signings are typically a reliable indicator of where the housing market is headed. That's because there's usually a one- to two-month lag between a sales contract and a completed deal.

But the Realtors group says a growing number of buyers have cancelled contracts ahead of closings after appraisals showed the homes were worth less than they bid. A sale isn't final until a mortgage is closed.

Homes are now the most affordable they've been in years. But bargain prices and super-low mortgage rates have done little to boost sales. Economists say it could be several years before the nation's housing market recovers.

Mixed reports on the struggling housing market - an increase in contract signings, a rise in home prices, slumping sales of re-sold homes and huge numbers of foreclosures in waiting - have left many economists puzzled. But one thing is clear: the housing market won't see a significant recovery this year.

"In absolute terms this is a very depressed level, and with prices in most areas either still declining or flat, there is little incentive for buyers to be aggressive," said Joshua Shapiro, chief U.S. economist at MFR Inc.

The gain in contract signings in June followed an 8.2 percent increase in May. However, those two increases did not make up for a huge drop-off in April when contract signings had fallen 11.3 percent.

Sales of previously owned homes fell for a third straight month in June and are lagging behind last year's sales pace when 4.91 million homes were sold, the fewest since 1997. In a healthy economy, people buy roughly 6 million existing homes annually.

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