Pending home sales increased 6.3% to a reading of 87.7 in December from an upwardly revised 82.5 in November, originally reported as 82.3, according to an index released yesterday by the National Association of Realtors.
Thomson Reuters’ poll of economists had predicted an 82.3 reading.
Year over year, the pending homes sales index was up 2.1% from last December, when it was at 85.9.
NAR’s housing affordability index rose 10.9% in December to 158.8, the highest on record. The index shows that the relationship between home prices, mortgage interest rates, and family income is the most favorable since tracking began in 1970, the group said.
Regionally, pending sales were mixed. The West saw a 3.7% decrease, while sales dipped 1.7% in the Northeast. Pending sales soared 12.8% in the Midwest and 13.0% in the South.
“The monthly gain in pending home sales, spurred by buyers responding to lower home prices and mortgage interest rates, more than offset an index decline in the previous month,” said NAR chief economist Lawrence Yun. “The biggest gains were in areas with the biggest improvements in affordability.”
Yun reiterated a vongressional stimulus package could help the market.
“Significant uncertainty still clouds the housing market despite improved affordability conditions. For a sustainable housing market recovery and, hence, sustainable economic recovery, we need a significant housing stimulus and mortgage availability for qualified borrowers,” he said.