The Pending Home Sales Index from the National Association of Realtors leveled in December after a 16.4% drop in November, signaling that it was likely the October rush to qualify for the expiring home-buyer tax credit was the driver behind the November dive.

The PHSI, based on sales contracts signed in December, increased 1% to 96.6 from 95.6 in November and 10.9% from December 2008. Analysts polled by Thompson Reuters were expecting a rise to 97.1.

Still, the increase in December marks gains in nine of the past 10 months in the index, which is a forward-looking indicator of closings to come.

"There are easily understood swings in contract activity as buyers respond to a tax credit that was expiring and was then extended and expanded,² said Lawrence Yun, NAR chief economist. "These swings are masking the underlying trend, which is a broad improvement over year-ago levels. December activity was the fifth highest monthly tally in two years."

Sales activity was mixed regionally, however. The Northeast rose 2.3% to 76.1, 14.9% higher than December 2008. The Midwest was up 5.2% to 86.9, and 8.7% above a year ago. The South gained 2.2% to an index of 98.4, 5.5% ahead of the same month in 2008. The West was down 3.8% to 119.9, still 18.6% above a year ago.

The NAR estimates that 2.4 million buyers will take advantage of the new home buyer tax credit, which is available for homes purchased by the end of April and closed by the end of June. However, Yun said, "While new-home sales will remain low due to a lack of construction, existing-home sales are projected to rise to around 5.6 million in 2010." The Realtors estimated5.16 million existing-home sales in 2009.

"For several months now we¹ve been seeing stabilization in all of the home price measures as inventory is pulled down," Yun said. "As a result, the housing wealth for many middle class families has begun to stabilize."