Pending Home Sales Up Slightly in February

Pending home sales rose unexpectedly in February, (NAR), a possible indication that the depressed housing market may finally be bottoming out.

According to the National Association of Realtors® NAR's Pending Home Sales Index, released Wednesday, home sales contracts signed in February rose 2.1 percent to a reading of 82.1, up from January's figure of 80.4. February sales remained slightly below those of a year ago.

The news comes on the heels of another NAR report that found home affordability is at an all-time high. Economists are hopeful that low interest rates and housing prices will lure more buyers and begin to reduce the burden the depressed housing market is placing on the economy.

"We are seeing a bottom in housing sales," said David Wyss, a chief economist with Standard & Poor's, in a Bloomberg Television interview. "People are coming in as bargain hunters. This is a good time to be buying a house."

The pending sales index is considered a reliable indicator of housing sales because it is based on a large sample size equaling approximately 20 percent of all transactions. The index's baseline of 100 represents sales levels in 2001, the year the index began.

The NAR's Home Affordability Index hit a record high of 173.5 in February. The figure means that a family earning the median income has 173.5 percent of the income needed to buy a median-priced single family home with a conventional mortgage. For February, the actual figures meant that a U.S. family earning the median income of $59,700 could afford a home costing $285,600, assuming a 20 percent down payment. The median home price in February was $164,600.

The Home Affordability Index, a broad measure of housing affordability using consistent values and assumptions over time, shows that the relationship between home prices, mortgage interest rates and family income is the most favorable since tracking began in 1970.