The number of U.S. households who signed contracts to buy homes continued to increase in November and reached the highest level in 19 months, a leading U.S. industry group reported on Thursday.
The National Association of Realtors (NAR) said its index of pending home sales, which measures the number of contracts to buy previously owned homes that were signed but not yet closed, gained 7.3 percent from 93.3 in October to 100.1 in November.
The index is also higher than the reading in November 2010, a low point on the heels of the expiration of a federal tax credit policy for home buyers.
This index is a leading indicator of future existing home sales, as there is usually a one- or two-month lag between signing a contract and closing a deal.
A reading of 100 indicates the average level of sales activity in 2001 when the index started. The reading was above the 100 threshold from March 2003 through April 2007 and then sank as the country fell into a deep recession caused by the burst of the housing bubble.
Lawrence Yun, NAR chief economist, said housing affordability conditions are at a record high and there is a pent-up demand from buyers who have been on the sidelines, but contract failures have been running unusually high.
"November is doing reasonably well in comparison with the past year. The sustained rise in contract activity suggests that closed existing-home sales, which are the important final economic impact figures, should continue to improve in the months ahead," Yun added.