Pending Home Sales Inch Up in December
After a double-digit drop in November, pending home sales increased slightly in December, according to the National Association of Realtors (NAR). The index, a forward-looking indicator of potential home sales, increased 1% in December and now sits 10.9% above its December 2008 level. Last-minute homebuyers looking to take advantage of the first-time homebuyer tax credit before its original Nov. 30 expiration date pushed NAR’s pending sales index up in October, before it dropped 16% in November. NAR’s chief economist Lawrence Yun said the tax credit is skewing the index. “There are easily understood swings in contract activity as buyers respond to a tax credit that was expiring and was then extended and expanded,” Yun said. “These swings are masking the underlying trend, which is a broad improvement over year-ago levels. December activity was the fifth highest monthly tally in two years.” President Barack Obama signed the tax credit's extension and expansion on November 6. Buyers have until April 30 to get a contract in place and June 30 to close. Yun projects the 2.4m households will take the tax credit in 2010, pushing existing home sales to 5.6m in 2010, up from 5.16m sales in 2009, which he said will help stabilize house prices. “For several months now we’ve been seeing stabilization in all of the home price measures as inventory is pulled down,” Yun said. “As a result, the housing wealth for many middle class families has begun to stabilize.” Regionally, the Midwest experienced the greatest monthly increase, 5.2% above November’s index reading and 8.7% higher than in December 2008. Pending sales in the Northeast were also up 2.3% from November and 14.9% from a year ago. In the South, the index increased 2.2% from November and 5.5% from a year ago. In the West, the index was down 3.8% from November, but up 18.6% from a year ago. Write to Austin Kilgore.