Because they track contract signings, pending home sales are considered a leading indicator. Existing-home sales are tabulated when a contract closes, typically a month or two later.
Reports last week showed a pickup in demand for houses. Sales of previously owned homes, which make up about 94 percent of the market, rose 4 percent to a 4.42 million annual pace, the most since January, the National Association of Realtors said Dec. 21.
Purchases of new single-family properties advanced 1.6 percent to a 315,000 annual pace, a seven-month high, figures from the Commerce Department showed Dec. 23. The increase pushed the number of new homes on the market to a record low.
"As the stabilization process moves forward, we are seeing inventory levels continuing to ease in many of our markets, which is a prerequisite for a housing recovery," Jeffrey Mezger, chief executive officer of Los Angeles-based KB Home, said in a Dec. 21 conference call with analysts.
Even with the increase in sales, residential real estate prices continue to fall, showing a broad-based decline that indicates the market continues to be weighed down by foreclosures.
The S&P/Case-Shiller index of property values in 20 cities dropped 3.4 percent from October 2010 after decreasing 3.5 percent in the year ended September, the New York-based group said this week. The median forecast of economists in a Bloomberg survey projected a 3.2 percent decrease.
The threat of continued declines could keep potential buyers waiting until they believe the market has bottomed, even as cheaper properties may make purchasing a home more affordable.
U.S. policy makers have initiated programs designed to revive the housing market. The Obama administration this month started a new version of the federal Home Affordable Refinance Program, or HARP, after the original plan helped less than a quarter of the people targeted to lock in lower mortgage rates.
At the Federal Reserve, officials this month reiterated that they will keep their benchmark interest rate near zero until at least mid-2013. The central bank in September decided to reinvest maturing housing debt into new mortgage-backed securities instead of Treasuries.