The US seasonally-adjusted pending home sales index rose 4.5 per cent to 105.9 points in January, the highest since April 2010, according to a report by the National Association of Realtors (NAR).

Economists were expecting the index to increase by a more moderate 1.5% as the housing market continues to give signs of a sustained recovery. Pending home sales rose in all regions but experienced the most strength in the Northeast, where it rose by 8.2%

"Favourable affordability conditions and job growth have unleashed a pent-up demand," said NAR Chief Economist Lawrence Yun.

The data comes after the US Commerce Department revealed on Tuesday that new home sales jumped 16% in January to the highest level since July 2008. Home prices rose in 2012 the most in more than six years.

Speaking to the Senate's Banking Committee, Federal Reserve Chairman Ben Bernanke made note of the housing recovery. "We are still far from where we like to be but the evidence shows that the housing market is strengthening and low interest rates is one of the reasons for that strengthening," he said.

"The increase in house prices and the increase in economic activity should benefit other industries as well," Bernanke added.

JP

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