On Feb. 2 the National Association of Realtors' Chief Economist, Lawrence Yun, said home sale statistics are skewed by the federal home buyer tax credit that sent some shoppers scrambling for a closing in 2009, and others racing to get in on a 2010 expanded and extended version of the federal break.

In fact, Yun said, pending home sales have stabilized and are up from those reported last year. The First Time Homebuyer Tax Credit threatened to sunset at the end of November in 2009. That caused an upswing in the number of homes sold. Then, the tax credit program was extended and expanded. The April 30 deadline for the extension is looming and home sales are again on the rise. The swings can be confusing.

In an NAR press release, Yun said, "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."

According to NAR, the Pending Housing Sales Index (PHSI) is a good market indicator. Following is a brief look at its recent performance.

In the Northeast PHSI rose 2.3 percent to 76.1 in December and is 14.9 percent higher than December 2008.
In the Midwest the index increased 5.2 percent to 86.9 and is 8.7 percent above a year ago.
Pending home sales in the South rose 2.2 percent to an index of 98.4, and are 5.5 percent higher than December 2008. In the West the index fell 3.8 percent to 119.9 but is 18.6 percent above a year ago.

Yun projects the extended and expanded tax credit will encourage 2.4 million households to take the credit in 2010. He expects new home sales to remain low, but existing home sales should rise to about 5.6 million this year. In 2009 there were 5.16 million existing-home sales. The increase in sales could help stabilize the market overall. It's simply a matter of supply and demand.