Pending home sales in December rose 6.3 percent the National Association of Realtors said Tuesday, with big gains in the South and Midwest offsetting modest declines in other regions. This jump in pending sales likely came on the heels of surging REO inventories, as more buyers took advantage of improved affordability conditions. The Pending Home Sales Index, a forward-looking indicator based on contracts signed in December, reached 87.7 from 82.5 in November, sitting 2.1 percent higher than its December 2007 reading of 85.9. “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 Lawrence Yun, NAR chief economist. “The biggest gains were in areas with the biggest improvements in affordability." But what Yun didn't say is the areas that saw "big improvements in affordability," likely also posted sky-high foreclosure rates. In a report Tuesday morning, Zillow.com found that distressed real estate transactions represented more than 30 percent of all resales recorded last year — and 10.9 percent of those transactions were short sales. Buyer's Market eh? No question. Consider NAR's Housing Affordability index. It rose 10.9 percent in December to 158.8, the highest reading on record since the group began tracking affordability in 1970. The idea here is that pending sales are rising, but much of that isn't likely to be "organic" sales activity in the sense that traditional retail resales are moving. What's more likely to move is fire-sale property slashed by banks. In the Midwest, the pending home sales index moved significantly, jumping 12.8 percent to 83.7. Similarly, the index in the South surged 13.0 percent to 96.8 in December, 1.6 percent above year-ago levels. Pending home sales in the Northeast, however, slipped 1.7 percent to 62.1, while the West's index fell 3.7 percent to 97.5. Read the NAR Report Write to Kelly Curran at kelly.curran@housingwire.com.