With bargains aplenty, home sales shoot up

Homebuyers took advantage of low mortgage rates and falling home prices in December as pending sales of existing homes shot up more than 6% from the previous month. The Pending Home Sales Index rose to 87.7, up 6.3% from an upwardly revised figure of 82.5 in November and up 2.1% — 85.9 — from the year-ago period. The biggest gains came in the South and Midwest, according to data released today by the National Association of Realtors in Washington. “The monthly gain in pending home sales, spurred by buyers responding to lower home prices and mortgage interest rates, more than offset an index decline in the previous month,” Lawrence Yun, chief economist at NAR, said in a statement. “The biggest gains were in areas with the biggest improvements in affordability.” NAR’s Housing Affordability Index climbed 10.9% in December to its highest level since the group starting tracking the information in 1970. The index reflects home prices, mortgage rates and family income. Still, Mr. Yun cautions that the improvement doesn’t mean the housing sector is rebounding. “Significant uncertainty still clouds the housing market despite improved affordability conditions,” he said. “For a sustainable housing market recovery and, hence, sustainable economic recovery, we need a significant housing stimulus and mortgage availability for qualified borrowers.” Housing activity remains weak, Charles McMillan, president of NAR and a broker with Coldwell Banker Residential Brokerage in Dallas-Fort Worth, said in a statement. “We can’t take our eye off the need to stimulate housing, which can set the foundation for an economic recovery.” He supports government proposals to eliminate the requirement that homebuyers repay the first-time homebuyer tax credit, raise mortgage loan limits permanently and expand the $7,500 tax credit to all homebuyers.