Have existing-home sales hit bottom?

According to a new economic study, the housing market may have hit bottom this summer and may be finally heading back into positive territory.  Two leading indicators, applications for purchase money mortgages and the number of homebuyers entering into contracts to purchase homes, suggest sales of resale homes hit bottom in July and will rebound this fall.

After hitting a low in the first half of July, purchase mortgage applications have edged up slightly, according to statistics gathered by the Mortgage Bankers Association. Because of the time it takes to approve a loan and close a home sale, loan applications submitted in August might not show up in statistics on existing-home sales until October.

Another leading indicator, which counts the number of homebuyers who have entered into purchase contracts was up 5.2 percent in July, according to the National Association of Realtors' pending sales index.

The improvement in purchase mortgage applications combined with the increase in pending home sales strongly suggest that sales have bottomed out, at least for now.