Real estate is in a holding pattern. Professionals and sellers, alike, keep looking for signs that the market will beat what ails it. This week, though, saw sales declines, flat commercial vacancy rates, as well as meager new home sales.

There is a bright spot in all of the recent figures. Pending homes sales grew substantially year or year from 2010, up 14.4 percent as a whole. Some regions fared much better, such as the West, which is up 20.6 percent over July 2010. The Midwest also saw double-digit growth and is now 18.8 percent above July 2010.

What is holding back growth in this quarter, however? Pending home sales declined in July by 1.3 percent from the month prior. Some experts blame the stall on the continued mortgage mess. Limited access to credit has buyers sitting on the sidelines. Fewer buyers translates into less demand, which in turn translates into falling prices.

Lawrence Yun, NAR chief economist, said sales activity is underperforming. "The market can easily move into a healthy expansion if mortgage underwriting standards return to normalcy," he said. "We also need to be mindful that not all sales contracts are leading to closed existing-home sales. Other market frictions need to be addressed, such as assuring that proper comparables are used in appraisal valuations, and streamlining the short sales process."

He continued, "It is now a question of lending standards and consumers having the necessary confidence to enter the market."

This decreased marked confidence is seen in recent mortgage applications, a future indicator of sales.

According to the Mortgage Bankers Association, mortgage applications decreased 2.4 percent from one week earlier. "Another week of volatile markets and rampant uncertainty regarding the economy kept prospective homebuyers on the sidelines, with purchase applications falling to a 15-year low," said Mike Fratantoni, MBA's Vice President of Research and Economics. "This decline impacted borrowers across the board, with purchase applications for jumbo loans falling by more than 15 percent, and purchase applications for the government housing programs (FHA, VA, and USDA) falling by 8.2 percent. Although mortgage rates remain quite low, they increased over the week, bringing refinance application volumes down slightly." The Refinance Index was down 1.7 percent for the week.

Sales of newly built homes are down, falling by 0.7 percent in July. NAHB Chief Economist David Crowe said, "While we expect to see some marginal gains in sales activity through the rest of 2011, we do not foresee any major advances until economic growth helps boost home buyers' confidence."

It's not just residential real estate that is in limbo. Commercial real estate vacancy rates are also flat, due in part to weak job growth.

Lawrence Yun commented that "disappointing economic growth in recent months means a slower recovery for most of the commercial real estate sectors, although multifamily housing continues to benefit from pent-up demand resulting from an abnormal slowdown in household formation in recent years. Many young people, who normally would have struck out on their own from 2008 to 2010, had been doubling up with roommates or moving back into their parents' homes. However, they've been entering the rental market as new households in stronger numbers this year. As a result, apartment vacancy rates are declining and rents are rising at faster rates."

Published: September 5, 2011

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Carla Hill, M.A., works on the Realty Times staff as Managing Editor for our online publication. She also is Producer for the real estate news channel, seen daily on RealtyTimes.com and on video newsletters nationwide.