The National Association of Realtors (NAR) reported that the number of signed purchase contracts for existing homes rose. Their index rose 3.5% in November. Even though the index remains 5.0% below its November 2009 The NAR’s Pending Home Sales Index took a steep dive following the expiration of the homebuyer tax credit in April.

Post-Tax Break Bounce Back

This is a sign that housing is regaining its health, even though the index remains 5.0% below its November 2009 measurement. This indicates that home sales are recovering without direct government stimulus. The NRA describes it as “a gradual recovery into 2011.”

The West posted the largest month-over-month jump of 18.2 percent, which is 0.4 percent above November 2009. The Northeast reported gains of 1.8 percent from a year earlier but is still 4.2 percent down from October. The South fell 1.8 percent while the Midwest declined 4.2 percent from October, according to the NAR.

What Caused the Increase?

Lawrence Yun, NAR chief economists, attributes this gain to an improvement in increased housing affordability, and overall economic improvements.

Will the Gain Continue?

“Further gains are needed to reach normal levels of sales activity… All the indicator trends are pointing to a gradual housing recovery…Home price prospects will vary depending largely upon local job market conditions,” says Yun.

Looking Forward: How Will Home Prices Fair?

“The national median home price, however, is expected to remain very stable even with a continuing flow of distressed properties coming onto the market, as long as there is a steady demand of financially healthy home buyers… As we gradually work off the excess housing inventory, supply levels will eventually come more in-line with historic averages, and could allow home prices to rise modestly in the range of 2 to 3 percent in 2012,” according to Yun.