Although the pending home sales declined again in January, they still remain 20.6% above the low in June of last year, according to the National Association of Realtors (NAR).

The Pending Home Sales Index is a indicator of the future of the real estate market. The data collected for the Pending Home Sales Index is reflection of the signed contracts not the actual closings. Closings occur within a month or two after the contracts are signed.

According to Lawrence Yun, chief economist for NAR, The housing market is healing with sales fluctuating at times, depending on the flow of distressed properties coming on the market. While home buyers over the past two years have been exceptionally successful with historically low default rates, there is still an elevated level of shadow inventory of distressed homes from past lending mistakes that need to go through the system." Yun goes on to explain that the U.S. should not expect the recovery to be in a straight upward path it will zigzag at times.