NEW YORK - Pending home sales climbed 2.0% to a reading of 93.7 in December as improvement in the economy and increasing affordability spurred buyers, according to a report released Thursday by the National Association of Realtors.
Economists polled by Thomson Reuters predicted a 1.0% increase for the index.
The November index was revised to a 91.9 reading, originally reported as 92.2
Year-over-year the pending homes sales index was down 4.2% from last December, when the index was 97.8.
Regionally, pending sales were mixed. The Northeast saw a 1.8% increase to 73.9, while sales soared 11.5% to 101.9 in the South and increased 8.0% in the Midwest. Sales plunged 13.2% to 105.8 in the West.
“Modest gains in the labor market and the improving economy are creating a more favorable backdrop for buyers, allowing them to take advantage of excellent housing affordability conditions. Mortgage rates should rise only modestly in the months ahead, so we’ll continue to see a favorable environment for buyers with good credit,” NAR Chief Economist Lawrence Yun said. “In the past two years, home buyers have been very successful, with super-low loan default rates, partly because of stable home prices during that time. That trend is likely to continue in 2011 as long as there is sufficient demand to absorb inventory,” he said.
“The latest pending sales gain suggests activity is very close to a sustainable, healthy volume of a mid-5 million total annual home sales. However, sales above 6 million, as occurred during the bubble years, is highly unlikely this year,” Yun said.
