More Americans are signing contracts to buy existing homes than at any time in nearly two years, boosting the housing industry's slow recovery, according to the National Association of REALTORS®' index of pending home sales.
The measure is up 2 percent to 97 in January after slipping 1.9 percent in December. The index of deals for previously owned homes is up 8 percent compared with the 89.8 level from January 2011.
Last month saw the highest point on the index since April 2010, when consumers drawn by a home-buyer tax credit pushed the figure to 111.3. That was the last time the measure exceeded 100 - the benchmark for industry health.
The index showed year-over-year increases in every region-a 9.8 percent increase in the Northeast, a 10.8 percent rise in the Midwest, a 10.5 percent boost in the South and a smaller 0.7 percent uptick in the West.
Contracts are usually signed a month or two before a deal closes and the home purchase is finalized, making the pending-sales index a leading indicator for where the market is headed. The REALTORS® group said last week that existing home sales in January were up more than 4 percent to an annual rate of 4.57 million.
Housing experts such as Lawrence Yun, the REALTOR® group's chief economist, credit the sliding unemployment rate-which fell in January to its lowest point in three years -as well as a downward trend in home prices and a supply of homes that is at a nearly seven-year low.
Clearly, movements in the index have been uneven, reflecting the head winds of tight credit, but job gains, high affordability and rising rents are hopefully pushing the market into what appears to be a sustained housing recovery.
Spring and summer sales will certainly be the best indication of whether or not we are getting closer to get out of this current deteriorated housing market. On a more personal note, I believe our local markets are definitely improving. Recently, I have experienced "multiple offer" situations on not only my listings, but also buyer clients who submitted bids.