Low mortgage rates go lower. Better days ahead for housing market?

In a boost for the hard-hit housing market, low mortgage rates fell still lower this week, and the number of pending home sales posted a rise for the month of July.

The average rate for a 30-year fixed loan is now 4.32 percent, the mortgage-buying firm Freddie Mac reported Thursday. That's down from 4.36 percent last week, and it's the lowest level ever in four decades of tracking.

Meanwhile, an index of pending home sales from the National Association of Realtors rose 5.2 percent, based on contracts signed in July. This index provides a forward-looking indicator of home sales set to close in August or September.

The rise in pending sales, although modest, is welcome news after recent reports of a plunge in home sales, following the end of a temporary tax credit for home buyers earlier this year.

But the pending transactions don't show a return to a strong level of sales. The good news is simply that pending sales headed up instead of down. The index rose to 79.4 from a level of 75.5 in June, but it remains well below its level of 98.1 a year ago.

“Home sales will remain soft in the months ahead, but improved affordability conditions should help with a recovery,” Lawrence Yun, chief economist for the Realtors association, said in a statement accompanying the pending-sales news. “But the recovery looks to be a long process. Home buyers over the past year got a great deal, and buyers for the balance of this year have an edge over sellers.”

Pending sales rose more in the West in July (11 percent) than in the rest of the United States.

But, compared with a year ago, the pace of activity is down considerably in all four major regions: by 16 percent in the South, 18 percent in the West, 21 percent in the Northeast, and 26 percent in the Midwest.

Home prices may decline further in the months ahead, many say. One problem for buyers: Qualifying for credit is much harder now than it was during the prerecession housing boom.

“The loan underwriting standards are tighter, but home buyers can improve their chances of getting a loan by staying well within their budget," Mr. Yun said.