Pending home sales fall off slightly after hitting a 19-month high

Pending home sales eased slightly in December after hitting a 19-month high the previous month, as the housing market makes slow progress forward. 

The number of potential homeowners who signed contracts last month declined 3.5 percent to 96.6 in December from 100.1 in November, the second-best level since April 2010, the National Association of Realtors reported Wednesday. 

A reading of 100 reflects a healthy market. 

Despite the drop, the number of signings is still 5.6 percent above December 2010, when it was at 91.5. The data reflects contracts, not closings.

“Even with a modest decline, the preceding two months of contract activity are the highest in the past four years outside of the homebuyer tax credit period,” said Lawrence Yun, NAR's chief economist. 

Contract failures remain an issue, with one-third of real estate agents reporting problems in the past few months, Yun said. 

Still, buyers are still completing sales after contract delays and others are making new offers even after contract failures, he said. 

Mortgage rates remain near historic lows, but potential buyers are stymied by tight lending and high unemployment. 

"Housing affordability conditions are too good to pass up,” Yun said. "Our hope is lending conditions will gradually improve with sustained increases in closed existing-home sales.”

Regionally, the index in the Northeast declined 3.1 percent to 74.7 in December and is 0.8 percent below a year ago. 

In the Midwest, the index rose 4 percent to 95.3 and is 13.3 percent higher than a year ago. 

Pending home sales in the South slipped 2.6 percent to an index of 101.1 in December but are 4.9 percent above 2010. 

In the West, the index fell 11 percent in December to 107.9 but is 3.7 percent higher than December 2010.

Despite the slight overall uptick in the housing market during the past few months, sales of new homes — figures are set for release on Thursday — could come in as the worst on record. Existing home sales were only slightly better than 2008, the worst showing since 1997.