Pending home sales in the U.S. rebounded by more than expected in the month of January, according to a report released by the National Association of Realtors on Wednesday.
NAR said its pending home sales index rose by 4.5 percent to 105.9 in January after falling by 1.9 percent to 101.3 in December. Economists had expected the index to increase by 3.0 percent.
A pending home sale is one in which a contract was signed but not yet closed. Normally, it takes four to six weeks to close a contracted sale.
With the bigger than expected increase, the pending home sales index reached its highest level since just before the deadline for the home buyer tax credit in April of 2010, when it hit 110.9.
NAR noted that the index was at its highest reading since February of 2007 when excluding spikes induced by the tax credits.
Lawrence Yun, NAR chief economist, said, "Favorable affordability conditions and job growth have unleashed a pent-up demand."
"Most areas are drawing down housing inventory, which has shifted the supply/demand balance to sellers in much of the country," he added. "It's also why we're experiencing the strongest price growth in more than seven years."
The increase by the pending home sales index was partly due to strength in the Northeast, where pending home sales rose by 8.2 percent.
Pending home sales in the South and the Midwest also rose by 5.9 percent and 4.5 percent, respectively, while pending sales in the West edged up by just 0.1 percent. NAR said the Western region is constrained by limited inventory.
"Over the near term, rising contract activity means higher home sales, but total sales for the year are expected to rise less than in 2012, while home prices are projected to rise more strongly because of inventory shortages," Yun said.
by RTT Staff Writer
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