After an October surge in first-time homebuyers trying to finalize deals before the original deadline for the $8,000 tax credit, the National Association of Realtors’ (NAR) index of pending home sales dropped 16% in November. Before President Obama signed the tax credit expansion and extension into law, on November 6, borrowers were required to close by November 30, 2009. The index is a measure of residential real estate transaction contract activity. NAR said despite the month-over-month decline, the index is 15.5% higher than the November 2008 level. “It will be at least early spring before we see notable gains in sales activity as home buyers respond to the recently extended and expanded tax credit,” said NAR chief economist Lawrence Yun. “The fact that pending home sales are comfortably above year-ago levels shows the market has gained sufficient momentum on its own. We expect another surge in the spring as more home buyers take advantage of affordable housing conditions before the tax credit expires.” Regionally, the index dropped 25.7% month-over-month in the Northeast, but is 14.7% higher than year-ago levels. The Midwest also experienced a 25.7% month-over-month decline, but the region is only 9.2% higher than one year ago. The South experienced a 15% month-over-month decline, but is 14.7% higher year-over-year. The West saw the smallest month-over-month decline at 2.7%, and is 21.4% higher on a year-over-year basis. The homebuyer tax credit was extended and now buyers must have a contract in place by April 30 and close by June 30 of this year. Yun said mortgage rates will likely increase slightly this year, but buyers looking to take advantage of the tax credit will create an uncharacteristic surge in springtime home buying activity. “Many trade-up buyers, who have historically timed their purchase based on school-year considerations, will have to accelerate their buying plans if they need the tax credit to make a trade,” Yun said. For an in-depth look at the impact of the homebuyer tax credits on the mortgage finance market, please see HousingWire's January issue feature: Borrowers Find a New Route Home. Write to Austin Kilgore.