Sales activity continues to percolate in the housing market, with the latest evidence of an uptick coming from the National Association of Realtors' Pending Home Sales Index.

The NAR said Wednesday its Pending Home Sales Index, a forward-looking indicator based on contracts signed in February, rose 2.1% to 82.1 from a reading of 80.4 in January. It remains, however, 1.4% below February 2008 when it was 83.3.

Regionally, the PHSI in the Northeast rose 10.6% to 63.9 in February, still 11.2% below a year ago. The Midwest jumped 14.5% to 83.1 and is 3.4% higher than February 2008. The South rose 4.4% to 85.8 in February, a scant 0.1% below a year ago. The West index fell 13.5% to 89.6, 1.7% below February 2008.

"Pending home sales have a way to go for there to be a meaningful increase, but recent increases in shopping activity are hopeful indicators that we'll see additional sales gains," said Lawrence Yun, NAR chief economist. "More buyers are getting into the market to take advantage of stimulus incentives and much improved housing affordability conditions, but it will take a few months before we could see this turn up in measurable sales contract activity."

Also in February, NAR's Housing Affordability Index rose 0.9 percentage poionto to a to a record high of 173.5 from an upwardly revised 172.6 in January. The HAI measures the relationship between home prices, mortgage interest rates and family income, and it at its highest level since tracking began in 1970.

A median-income family, earning $59,700, could afford a home costing $285,600 in February with a 20% down payment, assuming 25% of gross income is devoted to mortgage principal and interest. Affordability conditions for first-time buyers with the same income and small downpayments are roughly 80 percent of that amount. The affordable price is considerably higher the median existing single-family home price in February, which was only $164,600.

Last year at this time, the typical family could afford a home costing $265,600, which is $20,000 less than the current affordable price.

Yun said he expects housing inventories to rise through early summer from a normal seasonal pattern of more sellers appearing in the spring. "But with the positive housing stimulus incentives now in place, we expect home sales to gain momentum in the second half of the year with first-time buyers absorbing a lot of the excess inventory," he said. "Under these conditions, we should see price stabilization in most markets by the end of the year."