July's existing home sales, which represent contract closings, came in well below expectationsof a two to three percent gain, falling 3.5 percent month to month.
While analysts called for an increase, based on several months of rising pending home sales (contracts signed), they did not give enough weight to the three biggest issues plaguing the market, starting with tough credit conditions.
"Frustrating," was the word used over and over by National Association of Realtors chief economist Lawrence Yun at this morning's press briefing. Poor appraisals, or appraisers using distressed comparisons to non-distressed homes, sent a lot of buyers and sellers back to the drawing board. Tighter lending standards and "overly strict underwriting" were enough to offset record-low mortgage interest rates. All that led to an elevated level of cancellations.