The upward tick in existing home sales signaled by the National Association of Realtors' Pending Home Sales Index last month was a blip, according to July data released by the NAR Tuesday.

The NAR's PHSI, based on contracts signed in July, fell 3.2% to 86.5 from an upwardly revised reading of 89.4 in June, which was up 5.8% from May. The July index remains 6.8% below July 2007, when it stood at 92.8. The drop was significantly larger than the roughly 2% drop that had been expected by analysts.

"Pending home sales are oscillating month-to-month, with the long-term trend essentially flat," said Lawrence Yun, NAR chief economist. "The housing market outlook is very cloudy."

Regionally, the index rose 2.8% to 81.6 in July, 2.4% below a year ago; held steady at 93.7 in the South, which is 13.4% below July 2007; dropped 7.5% to73.6 in the Northeast, 13.2% below a year ago; and dropped . In the West, 10.6% to 90.3 in the West, 6.5% higher than July 2007.

Yun saw some positives in the data. "Contract signings have been steaming ahead, nearly doubling in activity from a year before in several California and Florida markets," Yun said. "The outer Washington, D.C., exurbs also are coming around very strongly."

He added, "Based on local market fundamentals, I expect robust home price growth in places like Denver and Houston over the next two years. In addition, the frequent reporting of multiple bids in California and Florida may be signaling a bottom in home prices in these areas."

The current NAR forecast now calls for existing-home sales of 5.01 million this year before rising 6.9% in 2009 to 5.35 million. Prices, after declining an average of 4% to 7% this year, will rise by 2% to 4% next year, in NAR's view. New-home sales will total about 508,000 in 2008 and 463,000 next year, down significantly from 775,000 in 2007. The NAR sees housing starts, including multifamily units, dropping another 17.1% in 2009 to 801,000 units from 966,000 this year.