The NAR pending home sales index for December is up 8.3 percent to 77.3 after a slightly downward revision to 71.4 in November. The increase is well above the consensus of up 1.3 percent in the Econoday survey of forecasters. Falling mortgage rates in December helped improve home affordability and led to more contract signings that will close in January and February. The Freddie Mac weekly rate for a 30-year fixed rate mortgage had a near-term peak of 7.79 percent in the October 26 week, after which it began its downward trajectory. It was over a full percentage point lower to 6.61 percent by the December 28 week.

NAR Chief Economist Lawrence Yun said,"The housing market is off to a good start this year, as consumers benefit from falling mortgage rates and stable home prices." He continued,"Job additions and income growth will further help with housing affordability, but increased supply will be essential to satisfying all potential demand."

Pending home sales in December, which were unchanged in November, are expected to rise 1.3 percent.

The National Association of Realtors developed the pending home sales index as a leading indicator of housing activity. Specifically, it is a leading indicator of existing home sales, not new home sales. A pending sale is one in which a contract was signed, but not yet closed. It usually takes four to six weeks to close a contracted sale.

This provides a gauge of not only the demand for housing, but the economic momentum. People have to be feeling pretty comfortable and confident in their own financial position to buy a house. Furthermore, this narrow piece of data has a powerful multiplier effect through the economy, and therefore across the markets and your investments. By tracking economic data such as the pending home sales index which measures home resales, investors can gain specific investment ideas as well as broad guidance for managing a portfolio.

Even though home resales don't always create new output, once the home is sold, it generates revenues for the realtor. It brings a myriad of consumption opportunities for the buyer. Refrigerators, washers, dryers and furniture are just a few items home buyers might purchase. The economic"ripple effect" can be substantial especially when you think a hundred thousand new households around the country are doing this every month.

Since the economic backdrop is the most pervasive influence on financial markets, home resales have a direct bearing on stocks, bonds and commodities. In a more specific sense, trends in the existing home sales data carry valuable clues for the stocks of home builders, mortgage lenders and home furnishings companies.

The National Association of Realtors moved up its publication schedule in 2011. Prior to 2011, the reference month was two months trailing the release date. In 2011, the reference month trails only by one month to the release month.