Contracts to purchase previously owned US homes neared a two-year high in January, an industry group said on Monday, further evidence the housing market was slowly turning the corner. The National Association of Realtors said its Pending Home Sales Index, based on contracts signed in January, increased 2 percent to 97.0 - the highest reading since April 2010. New contracts generally lead sales by a month or two.
Housing data ranging from home building to resales have been relatively upbeat, buttressing other signs of underlying economic strength that should help the US recovery better handle rising gasoline prices and a recession in the euro zone. The housing market is becoming less of a drag on the economy and home construction is expected to add to growth this year for the first time since 2005.
"Clearly we had better weather conditions in January that might have helped, but we have a situation where we are seeing a number of housing statistics turn," said Michael Strauss, chief economist at Commonfund in Wilton, Connecticut. "It suggests housing is going to be an additive to GDP this year."
December's pending home sales index was revised to show a much smaller 1.9 percent drop instead of the previously reported 3.5 percent decline. In January, new contracts were up 8.0 percent from their year-ago level. The rise in last month's index suggested home resales would increase for a second consecutive month in February, and it also bodes well for the spring sales season.