The National Association of Realtors said Friday that its seasonally adjusted pending home sales index increased 1.7 per cent to 104.2 last month. December's figure was also revised higher to show a decline of only 1.5 per cent, considerably better than a previously estimated drop of 3.7 per cent.
The index is now 8.4 per cent above its level one year ago and is at the highest level since August 2013.
The data point to a rebound in sales of existing homes in the coming months, particularly as the spring buying season gets underway. Measures of sales and construction fell last month, raising concerns that the housing market would continue to struggle after a weak 2014. But economists expect that strong job gains, low mortgage rates and solid consumer confidence will give a moderate boost to home sales this year.
"Through the volatility, the trend in home sales is probably up modestly at least," Jim O'Sullivan, chief U.S. economist at High Frequency Economics, said in a note to clients.
Pending sales are a barometer of future purchases. A one- to two-month lag usually exists between a contract and a completed sale.
The largest increase in signed contracts occurred in the South, where they rose 3.2 per cent, followed by the West, where sales rose 2.2 per cent. Contract signings inched up just 0.1 per cent in the Northeast, where heavy snow may have weighed on housing. Pending homes sales slipped 0.7 per cent in the Midwest.
The increase in signed contracts comes after some disappointing data at the start of the year. Sales of existing homes tumbled 4.9 per cent in January to a nine-month low, while sales of new homes slipped 0.2 per cent. And new construction of homes and apartments fell 2 per cent in January.
But healthy hiring should encourage more Americans to start looking at homes. There are 3.2 million more Americans earning paychecks than there were 12 months ago. And younger Americans are finally seeing strong job gains, which could push up the number of first-time homebuyers, a critical ingredient in any housing recovery.
Mortgage rates remain near historic lows. The average 30-year fixed mortgage rate was 3.76 per cent last week, according to the mortgage giant Freddie Mac. That has ticked up in recent weeks, but is well below the 4.33 per cent average from a year ago.