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Tract homes in Santa Clarita, California. Pending homes sales in the U.S. are at levels not seen since 2010.
We've gotten two positive housing data sets in the past two days. First, the Case-Shiller index for June is indicating that the U.S. housing market has formed a bottom. Today, the National Association of Realtors released July pending home sales — those are homes that have been contracted for sale but not yet sold — and the improvement over 2011 is notable.
This is from the NAR:
"[T]he index is at the highest level since April 2010, which was shortly before the closing deadline for the home buyer tax credit. "While the month-to-month movement has been uneven, more importantly we now have 15 consecutive months of year-over-year gains in contract activity," said [Chief Economist Lawrence Yun].
Bear in mind that Case-Shiller is, to an extent, designed to counteract any excessive frothiness that might percolate in the U.S. housing market due to forward-looking indicators such as pending home sales. Case-Shiller focuses on prices and lags the market by a few months because in the 20 cities the index tracks only homes that have been sold are counted.
But the pending-sales data for July shouldn't be overlooked. It shows that, compared with last year, in the middle of the summer selling season, there is increasing demand for homes. That demand, if it sustains itself, will support the housing bottom that Case-Shiller is pointing to and — at long last — set the stage for home prices to climb back from where they are currently: depressed to 2003 levels.