The NAR's pending home sales index for November sounds an up note at a time of moderation in prices and mortgage rates, and expanding inventory for buyers to choose from. Overall wages continue to increase. Where potential homebuyers are feeling secure in their finances, the housing market is more attractive. Pending home sales are those that will close in the next month or two and suggest that existing home sales will rise in the coming months.

The November pending homes sales index is up 3.3 percent to 79.2 from an upward revision to 76.7 in October, and are up 2.6 percent year-over-year. The November monthly increase is above the consensus of up 0.8 percent in the Econoday survey of forecasters. The indexes for the four regions are up across the board both for month-over-month and year-over year-over-year. The monthly increase for the Northeast is 1.8 percent, the Midwest is 1.3 percent, the South is up 2.4 percent, and the West jumps 9.2 percent higher.

Pending home sales contracts use mortgage for which the buyer has qualified recently, mostly in October and November. The monthly average rate for Freddie Mac 30-year fixed rate mortgages declined to 6.25 percent in October after 6.35 percent in September. The average rate for November to date is 6.24 percent. The average for December to-date is 6.21 percent, a small dip that probably won't be a big incentive for homebuyers in that month. Home sales typically go cold around the holiday period.

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.