(RTTNews) - Pending home sales unexpectedly showed a notable increase in the month of December, according to a report released by the National Association of Realtors on Tuesday, with buyers taking advantage of improved affordability conditions.
The report showed showing that pending home sales rose 6.3 percent in December following a revised 3.7 percent decrease in November. Economists had expected pending home sales to come in unchanged compared to the 4.0 percent decrease originally reported for the previous month.
With the unexpected monthly increase, pending home sales in December were up 2.1 percent compared to the same month a year ago.
Lawrence Yun, NAR chief economist, said, "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."
"The biggest gains were in areas with the biggest improvements in affordability," Yun added.
NAR said that its housing affordability index rose 10.9 percent in December to 158.8, the highest level since tracking began in 1970.
The report showed that the unexpected increase in pending home sales came as strong gains in the South and Midwest more than offset modest declines in the Northeast and West.
While pending home sales rose 13.0 percent in the South and 12.8 percent in the Midwest, pending home sales in the Northeast and West fell 1.7 percent and 3.7 percent, respectively.
Yun noted, "For a sustainable housing market recovery and, hence, sustainable economic recovery, we need a significant housing stimulus and mortgage availability for qualified borrowers."
Last week, separate reports on new and existing home sales in the month of December indicated a mixed view of the housing market. While new home sales fell more than expected to a record low annual rate, existing home sales unexpectedly rebounded amid a decrease in prices.
A pending home sale is one in which a contract was signed but not yet closed. Normally, it takes four to six weeks to close a contracted sale.
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