Last month's number was also revised up to reflect a 1.9 percent decline, from the initial reading of a 4.3 percent decline.
A regional breakdown shows that in the Northeast the pending home sales index (PHSI) were up 8.2 percent on the month, in the Midwest it was up 4.5 percent on the month, in the South it was up 5.9 percent, and in the West it was up a marginal 0.1 percent, and down 1.5 percent from a year ago.
"Favorable affordability conditions and job growth have unleashed a pent-up demand," said NAR's chief economist, Lawrence Yun in a press release. "Most areas are drawing down housing inventory, which has shifted the supply/demand balance to sellers in much of the country. It's also why we're experiencing the strongest price growth in more than seven years."
We saw some strong housing data yesterday, with new home sales surging 15.6 percent in January and analysts have pointed out the tight supply of homes.
Today's release showed that existing home supply is tight, especially in the West which is why home price increases in the region are increasing the most, according to Yun. He said he now expects 5 million home sales in 2013, down from 5.1 million.
The S&P Case-Shiller home prices were up 6.84 percent in December, the biggest gain since July 2006. Tight supply of homes is expected to add upward pressure on home prices this year.