Posted on Friday, February 4, 2011
The number of people who signed contracts to buy homes rose in December, marking the fifth increase in the past six months.
The National Association of Realtors said Thursday that its index of sales agreements for previously occupied homes rose 2 percent last month. The index had posted a 3.1 percent increase in November.
Economists have cautioned that a big reason for the jump is that people are buying foreclosed homes. Still, the increase is likely to give the weak housing market a boost in the first few months of the year. That's because there's usually a one- to two-month lag between a sales contract and a completed deal.
The number of Americans who bought previously owned homes last year fell to the lowest level in 13 years, and economists say it will be years before the housing market fully recovers.
High unemployment and a record number of foreclosures are deterring potential b uyers who fear home prices haven't reached the bottom. Job growth is expected to pick up this year, but not enough to raise home sales to healthier levels.
Contract signings in December were up in every region of the country except the West.
The gains were led by an 11.5 percent increase in the South. Signings were up 8 percent in the Midwest and 1.8 percent in the Northeast. However, they fell 13.2 percent in the West.
With the recent increases, contract signings are 24.1 percent above their low point in June. In that month, signings fell to the lowest level since the Realtors began tracking signed contracts in 2001.
Even with the gain in December, signings are 4.2 percent below where they were in December 2009.
At the end of 2009, the housing market got a boost as buyers rushed to close deals to take advantage of a federal home-buying tax credit that initially was set to expire in November.
The tax credit was later extended to April 30. After it expired, housing activity slumped
THE ASSOCIATED PRESS