Pending Home Sales Show Modest Rebound In December

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After showing a substantial decrease in the previous month, pending home sales stabilized in the month of December, according to a report released by the National Association of Realtors on Tuesday. Pending home sales showed a modest increase that came roughly in line with estimates.

NAR said pending home sales, a leading indicator of activity in the housing sector, increased by 1.0 percent in December following a revised 16.4 percent decrease in November. Economists had been expecting pending home sales to increase by about 1.1 percent.

Lawrence Yun, NAR chief economist, said, "There are easily understood swings in contract activity as buyers respond to a tax credit that was expiring and was then extended and expanded."

"These swings are masking the underlying trend, which is a broad improvement over year-ago levels," he added. "December activity was the fifth highest monthly tally in two years."

Compared to the same month a year ago, pending home sales in December were up 10.9 percent, a slowdown from the 15 percent annual rate of growth seen in November.

The monthly increase in pending home sales was partly due to strong growth in the Midwest, where pending home sales increased by 5.2 percent in December.

Pending home sales in the Northeast and the South rose by 2.3 percent and 2.2 percent, respectively, while pending home sales in the West fell by 3.8 percent.

Looking ahead, Yun predicted that the extended and expanded homebuyer tax credit will encourage 2.4 million households to take the credit in 2010.

While the first-time homebuyer tax credit had been due to expire at the end of November, President Barack Obama signed a bill that extended and expanded the tax credit.

The bill extends the $8,000 first-time homebuyer tax credit through April 30, 2010 and expands it to include a $6,500 credit for people who have lived in their current homes for at least five years.

"While new-home sales will remain low due to a lack of construction, existing-home sales are projected to rise to around 5.6 million in 2010," Yun said.

Yun also predicted that rising sales will contribute to firming home prices, noting, "For several months now we've been seeing stabilization in all of the home price measures as inventory is pulled down."

After showing a substantial decrease in the previous month, pending home sales stabilized in the month of December, according to a report released by the National Association of Realtors on Tuesday. Pending home sales showed a modest increase that came roughly in line with estimates. NAR said pending home sales, a leading indicator of activity in the housing sector, increased by 1.0 percent in December following a revised 16.4 percent decrease in November. (Market News Provided by RTTNews)