A Small Sign Of An Increase In Home Sales

This forward-looking index is still down 11% from a year ago.

Home sales plunged in November and December.

The supply of homes for sale keeps falling. Interest rates remain low. There are tax benefits for buying a home. Home prices are down.

These are the reasons for a stable home market.

The LAT says:

"The pending sales index stabilized at the end of 2009," Weiss Research analyst Michael D. Larson wrote in a note to clients. "That potentially sets the stage for a more positive spring selling season. Indeed, with mortgage rates low, house prices down, and the supply of homes for sale steadily falling, it's easy to see why the market should stabilize."

"There are easily understood swings in contract activity as buyers respond to a tax credit that was expiring and was then extended and expanded," said Lawrence Yun, chief economist of the Realtors group. "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."