Modest easing in mortgage rates have not coaxed too many buyers off the sidelines, with many still in wait-and-see mode given the clouds over the economy as well as the uncertainty over potential rate cuts by the Federal Reserve this year.

The NAR pending home sales index is down 0.4 percent to 71.7 in July from 72.0 in June. The July consensus was for a 0.2 percent uptick in the Econoday survey of forecasters. This is the second straight monthly drop and indicates existing home sales are unlikely to rebound in August when the time comes to close contracts.

The pending home sales indexes are down in three of four regions (the West was the exception). Declines are a small 0.1 percent in the South and 0.6 percent in the Northeast, and more pronounced at down 4.0 percent in the Midwest. The index for the West is up 3.7 percent.

Sales expected to retrace by 0.2 percent after dropping 0.8 percent in June. Home sales not looking good.

The National Association of Realtors developed the pending home sales index as a leading indicator of housing activity. Specifically, it is a leading indicator of existing home sales, not new home sales. A pending sale is one in which a contract was signed, but not yet closed. It usually takes four to six weeks to close a contracted sale.

This provides a gauge of not only the demand for housing, but the economic momentum. People have to be feeling pretty comfortable and confident in their own financial position to buy a house. Furthermore, this narrow piece of data has a powerful multiplier effect through the economy, and therefore across the markets and your investments. By tracking economic data such as the pending home sales index which measures home resales, investors can gain specific investment ideas as well as broad guidance for managing a portfolio.

Even though home resales don't always create new output, once the home is sold, it generates revenues for the realtor. It brings a myriad of consumption opportunities for the buyer. Refrigerators, washers, dryers and furniture are just a few items home buyers might purchase. The economic"ripple effect" can be substantial especially when you think a hundred thousand new households around the country are doing this every month.

Since the economic backdrop is the most pervasive influence on financial markets, home resales have a direct bearing on stocks, bonds and commodities. In a more specific sense, trends in the existing home sales data carry valuable clues for the stocks of home builders, mortgage lenders and home furnishings companies.

The National Association of Realtors moved up its publication schedule in 2011. Prior to 2011, the reference month was two months trailing the release date. In 2011, the reference month trails only by one month to the release month.