"Contract activity is convincingly up compared to a year ago despite comparable inventory levels," said the association's chief economist Lawrence Yun in a release. "The difference this year is the positive factors supporting stronger sales, such as slightly improving credit conditions, more jobs and slower price growth."

Its monthly index of so-called pending sales, an indicator of future closed sales, rose 1.7 percent month-to-month, and is now 8.4 percent higher than it was a year ago. This is the fifth straight month of year-over-year gains, and the gains are increasing.

U.S. home buyers signed more contracts to buy existing homes in January than they have since August of 2013, according to the National Association of Realtors.

The report is a turnaround from far lower-than-expected closed sales of existing homes in January. Those are based on contracts signed at the end of 2014. While some have blamed cold, harsh weather in much of the country for weakness in housing activity so far this year, the real problem is a lack of for-sale supply. Last winter was particularly cold and snowy as well, but there were more homes available for buyers to choose from.



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Mortgage applications to purchase a home have been weak so far this year, despite interest rates being significantly lower than they were a year ago. Both supply and still-tight credit standards are weighing on would-be buyers.



The lack of supply is also pushing price gains again. They had been shrinking throughout much of last year, but recent reports show the gains accelerating again. Realtors expect sales to gain strength over the next few months, with one big caveat.



"The pace will greatly depend on how much upward pressure the impact of low inventory will have on home prices. Appreciation anywhere near double digits isn't healthy or sustainable in the current economic environment," admitted Yun.



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Pending home sales in the Northeast inched up 0.1 percent in January, and are now 6.9 percent above a year ago. In the Midwest, sales fell 0.7 percent, but are 4.2 percent above January 2014. Sales were strongest in the South, up 3.2 percent to the highest level since April 2010 and 9.7 percent above last January. Sales in the West rose 2.2 percent and are 11.4 percent above a year ago.

