The Pending Home Sales Index rose slightly in December, climbing 1 percent from November.
It's a figure compiled by the National Association of Realtors® using sales data from over 100 regional listing services and more than 60 large brokerages around the country. It is a total of homes under contract that have not yet sold. Because the pending sales are a true measure of activity, it's widely considered to be the best way to predict the housing market.
Right now, the predictions are for a busy spring. After Pending Home Sales dipped in November, Existing Home Sales dipped in December. Therefore, using December's Pending Home Sales Index, we can project January's Existing Home Sales with decent accuracy.
For home buyers, this is all great news. Home prices are based on the balance of supply and demand between buyers and sellers. Home supply dipped all through 2009 and inventory was nearly 50% smaller in November 2009 relative to November 2008.
In December, the home supply rose for the first time in seven months and Jauary should show a similar supply increase.
With mortgage rates still low and the first time home buyer tax credit deadline less than 100 days away, it is fair to expect more activity, more Pending Sales, and a shrinking Home Supply by March and April.
