By Alan Zibel and Eric Morath
Of DOW JONES NEWSWIRES
WASHINGTON (Dow Jones)–The number of U.S. home buyers who signed contracts to purchase previously owned homes grew in January to the highest level in 21 months as the housing market showed signs of recovery.
The National Association of Realtors’ seasonally adjusted index for pending sales of existing homes increased 2.0% on a monthly basis to 97.0. It was the highest reading since April 2010, when sales were getting a lift from federal tax credits. The results were 8.0% above the same month a year earlier.
Economists surveyed by Dow Jones Newswires had forecast that pending home sales would rise by 1.0% on a monthly basis from an originally reported December reading of 96.6. December’s figures were revised downward to a reading of 95.1.
“Given more favorable housing market conditions, the trend in contract activity implies we are on track for a more meaningful sales gain this year,” said Lawrence Yun, the Realtors’ chief economist.
The index tracks agreements to purchase homes. A sale is considered pending when the contract has been signed but the transaction hasn’t closed. Pending sales typically close within one or two months of signing.
The housing market has been one of the weakest parts of the U.S. economy, but recent economic data show it is starting to get back on track after a price collapse that began 5 1/2 years ago. Mortgage rates have been hovering around the lowest recorded levels, employers have stepped up hiring and economists’ forecasts have become less gloomy.
However, prices in many distressed markets have continued to fall due to a continuing flow of foreclosures. While the share of loans in foreclosure has remained elevated, the number of new borrowers falling behind on their mortgages has been falling.
Pending sales rose in two out of four U.S. regions in December. They rose 7.7% in the South and 7.6% in the Northeast, but fell 4.4% in the West and 3.8% in the Midwest.
(MORE TO FOLLOW) Dow Jones Newswires
February 27, 2012 10:00 ET (15:00 GMT)
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