Pending Home Sales Index Highest Since April 2010

Contract signings to purchase previously owned homes jumped more than forecast in January, another positive indicator of a slowly improving housing market.
The Pending Home Sales Index, a forward-looking indicator based on signed contracts, rose 2.0 percent to 97.0 in January, up from a downwardly revised 95.1 in December, according to the National Association of Realtors.
Most analysts had called for a 1 percent increase for January.
The index is 8 percent higher than January 2011 when it was 89.8. The data reflects contracts, but not closings.
The January index is the highest since April 2010, when it reached 111.3 as buyers were rushing to take advantage of the homebuyer tax credit.
Lawrence Yun, NAR chief economist, said this is a good indicator moving into the spring home-buying season.
“Given more favorable housing market conditions, the trend in contract activity implies we are on track for a more meaningful sales gain this year,” Yun said. “With a sustained downtrend in unsold inventory, this would bring about a broad price stabilization or even modest national price growth, of course with local variations.”
The Pending Home Sales Index in the Northeast rose 7.6 percent to 78.2 in January and is 9.8 percent above a year ago.
In the Midwest, the index declined 3.8 percent to 88.1, but is 10.8 percent higher than January 2011.
In the South, the index increased 7.7 percent to 109.1 in January, and is 10.5 percent above a year ago.
In the West, the index fell 4.4 percent in January to 101.9, but is 0.7 percent above January 2011.
“Movements in the index have been uneven, reflecting the headwinds of tight credit, but job gains, high affordability and rising rents are hopefully pushing the market into what appears to be a sustained housing recovery,” Yun said.
When credit availability returns to normal, home sales will likely get a 15 percent boost an speed up the recovery of home prices, Yun said.
“And thereby significantly reduce the number of homeowners who are underwater,” he said.

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