Contracts to buy homes rise slightly, a sign that home sales could be stabilizing

Contracts to buy homes inch up in December

MIAMI — The number of people preparing to buy a home rose slightly in December, a positive sign heading into the spring home buying season.

The National Association of Realtors said Tuesday its seasonally adjusted index of sales agreements rose 1 percent from November to December to a reading of 96.6. That was a bit lower than the 97.1 level analysts expected, according to Thomson Reuters.

The index has risen for nine out of the past 10 months as buyers work to take advantage of an $8,000 first-time homebuyer tax credit.

The credit had been set to expire Nov. 30 before Congress extended it to April 30. Lawmakers also added a $6,500 credit for current homeowners.

The pending home sales index fell 16 percent from October to November, as activity temporarily died down after the first-time buyer credit was extended. The index is up nearly 11 percent from December 2008.

“These swings are masking the underlying trend, which is a broad improvement over year-ago levels,” said Lawrence Yun, the Realtors’ group chief economist.

The real estate industry hopes the recovery will continue, and Mike Larson, a real estate analyst with Weiss Research, said the index “sets the stage for a more positive spring selling season.”

But the industry has to overcome significant challenges, such as high unemployment, rising foreclosures and tight lending standards.

“The result? We’ll likely just muddle through instead of witness a V-shaped recovery like those that followed previous housing busts,” Larson said.