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US January pending home sales best since 2010

A home for sale is seen in Larkspur, California on February 21, 2013
US pending home sales rebounded sharply in January from a December dip to the highest level in almost three years as the housing market recovers, a trade organization said.

US pending home sales rebounded sharply in January from a December dip to the highest level in almost three years as the housing market recovers, a trade organization said Wednesday.

The National Association of Realtors reported its pending home sales index rose 4.5 percent to 105.9 in January from a downwardly revised 101.3 in December.

Pending home sales, an indicator based on contract signings but not closings, were at their highest reading since April 2010, when the index hit 110.9 just before the deadline for the government's homebuyer tax credit, NAR said in a statement.

The January reading was 9.5 percent above the year-ago level and marked the 21st consecutive month of year-on-year gains in the indicator.

All four regions showed rising contract activity. The Northeast had the strongest gain, up 8.2 percent, while the West lagged with a scant 0.1 percent increase.

Tight inventory would be the key factor in the 2013 housing market as mortgage rates hover near record lows, said Lawrence Yun, NAR's chief economist.

"Favorable affordability conditions and job growth have unleashed a pent-up demand. Most areas are drawing down housing inventory, which has shifted the supply/demand balance to sellers in much of the country," Yun said.

Yun said that tight inventory was driving the strongest price growth in more than seven years but he predicted total 2013 sales would rise less than in 2012.

He estimated price growth could exceed an estimated 7.0 percent gain this year if inventory supplies remained low.

The January pending home sales reading was much better than the 1.0 percent increase expected by most analysts and followed encouraging reports Tuesday on new-home sales and home prices.

New-home sales soared 15.6 percent in January and the closely watched S&P/Case-Shiller 20-city home price index jumped 6.8 percent in December from a year ago.

"Between this report (pending home sales) and the upside surprises in the housing market data released yesterday... housing market activity appears to have ended 2012 on a positive note and is off to a strong start in 2013," Barclays analyst Cooper Howes said.

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