Pending Home Sales Jump 4.9% in December

The increase is the largest gain in nearly three years, the National Association of Realtors reports. There should be modest sales gains throughout 2007, NAR's chief economist says.
By: Rex Nutting: Real Estate Journal Online
Seasonally adjusted pending home sales jumped 4.9% in December, the largest gain in nearly three years, the National Association of Realtors reported Thursday.

The pending home sales index was at its highest level since June and was down 4.4% compared with December 2005.

"Some of the monthly gain may be weather related, but it appears buyers are becoming more comfortable, sensing the timing is good and that their local market has bottomed out," said David Lereah, chief economist for the realty trade group, in a press release. "I expect modest sales gains throughout the year, with what I believe are sustainable levels of activity."

This past December was one of the warmest Decembers on record. Temperatures were particularly mild in the Midwest and Northeast. Mortgage interest rates were also favorable in December, with 30-year loans averaging 6.14%.

The pending home sales index measures signed sales contracts. A separate report on existing home sales measures sales when they close, typically a month or two after the contract is signed. Existing home sales were down 10.8% year-on-year in December.

Pending home sales increased in all four regions. Pending sales rose 8.1% in the Northeast, 5.3% in the West, 4.3% in the South and 3.2% in the Midwest. On a year-over-year basis, pending sales are down between 4% and 5% in all four regions.