January’s pending home sales numbers suggest that inventory shortages will mean a less dramatic increase in sales this year than last, but that home prices will show stronger gains, the National Association of Realtors said today.

Pending home sales were up 4.5 percent from December to January and 9.5 percent from a year ago. At 105.9, NAR’s Pending Home Sales Index was at its highest level since April 2010, when home buyer tax credits helped fuel demand.

An index of reading of 100 is equal to the average level of contract activity during 2001, when the index was created. Existing-home sales in 2001 fell within the range of 5.0 to 5.5 million, which NAR said would be considered normal for the current U.S. population.

Yun is forecasting 5.0 million existing-home sales this year, down from a previous esimate of 5.1 million. He thinks home price growth could exceed 7 percent, up from a previous estimate of 5.5 to 6.0 percent.

"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," NAR Chief Economist Lawrence Yun said in a statement. "It’s also why we’re experiencing the strongest price growth in more than seven years."

In the Northeast, the Pending Home Sales Index was up 8.2 percent from December to January, to 84.8, a 10.5 percent increase from a year ago.

In the Midwest, the index was up 4.5 percent from December, to 105.0, a 17.7 percent increase from a year ago.

In the South, the index was up 5.9 percent from December, to 119.3, an 11.3 percent increase from a year ago.

In the West, the index was essentially unchanged from December, edging up 0.1 percent from December to 102.1, which represents a 1.5 percent decline from a year ago.

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