Pending home sales rose by 7.3% in November to the highest level since April 2010, according to a National Association of Realtors report.
The index, which measures the number of contracts signed to buy previously owned homes in the U.S., rose to a reading of 100.1 in November from 93.3 in October as homebuyers look to finalize purchases before the homebuyer tax credit expires at the end of the year.
“Housing affordability conditions are at a record high and there is a pent-up demand from buyers who’ve been on the sidelines,” said Lawrence Yun, chief economist with the NAR. “The sustained rise in contract activity suggests that closed existing-home sales, which are the important final economic impact figures, should continue to improve in the months ahead.”
Pending home sales are viewed as an indicator of future home sales because they reflect contracts — not closings — and generally occur with a lag time of one to two months.
Data from earlier in the week showed a mixed picture of the overall housing sector. Home prices continued to slide in October according to the S&P/Case-Shiller home price index released Tuesday.
The index fell 1.2% in October and posted a year-over-year decline of 3.4%, exceeding the 3.2% drop forecast by economists, according to Thomson Reuters.
“In the October data, the only good news is some improvement in the annual rates of change in home prices, with 14 of 20 cities and both Composites seeing their annual rates of change improve,” the report said.
In the month, 19 out of 20 monitored cities saw falling home prices. Only Phoenix saw a gain with a 0.3% increase in prices.