Pending home sales climbed again in November, with the broad trend over the past five months indicating a gradual recovery into 2011, according to the National Association of Realtors (NAR).
The Pending Home Sales Index rose 3.5 percent to 92.2 based in November from a downwardly revised 89.1 in October.
The index is currently 5.0 percent below the 97.0 reading recorded in November 2009.
The data reflects contracts and not closings, which normally occur with a lag time of one or two months.
Lawrence Yun, NAR chief economist, said historically high housing affordability is boosting sales activity.
“In addition to exceptional affordability conditions, steady improvements in the economy are helping bring buyers into the market,” he said. “But further gains are needed to reach normal levels of sales activity.”
The Index in the Northeast increased 1.8 percent to 72.6 in November but is 6.2 percent below November 2009.
In the Midwest the index fell 4.2 percent in November to 78.3 and is 7.7 percent below a year ago.
Pending home sales in the South fell 1.8 percent to an index of 91.4 and are 7.2 percent below November 2009.
In the West the index jumped 18.2 percent to 123.3 and is 0.4 percent above a year ago.
“If we add 2 million jobs as expected in 2011, and mortgage rates rise only moderately, we should see existing-home sales rise to a higher, sustainable volume,” Yun said.
“Credit remains tight, but if lenders return to more normal, safe underwriting standards for creditworthy buyers, there would be a bigger boost to the housing market and spillover benefits for the broader economy.”
All the indicator trends are pointing to a gradual housing recovery, NAR believes.
“Home price prospects will vary depending largely upon local job market conditions,” Yun said.
“The national median home price, however, is expected to remain stable even with a continuing flow of distressed properties coming onto the market, as long as there is a steady demand of financially healthy home buyers.”