US housing contracts to buy previously second-hand homes rose slightly in December after a record plunge, signalling that an extended tax credit will take time to have an impact.

The index of purchase agreements, or pending home sales, rose 1% after a 16% dip in November that was the largest since records began in 2001, the National Association of Realtors said today. Compared with a year earlier, pending sales rose 11%.

Lawrence Yun, NAR chief economist, said it’s important to recognize how the tax credit is skewing market data. “There are easily understood swings in contract activity as buyers respond to a tax credit that was expiring and was then extended and expanded,” he said. “These swings are masking the underlying trend, which is a broad improvement over year-ago levels. December activity was the fifth highest monthly tally in two years.”

Buyers who have a contract in place to purchase a primary residence by April 30, 2010, have until June 30, 2010, to finalise the transaction to qualify for a tax credit of up to $8,000 for first-time buyers and $6,500 for repeat buyers.

The pending index in the Northeast rose 2.3% to 76.1 in December and is 14.9% higher than December 2008. In the Midwest the index increased 5.2% to 86.9 and is 8.7 percent above a year ago. Pending home sales in the South rose 2.2% to an index of 98.4, and are 5.5% hgher than December 2008. In the West the index fell 3.8% to 119.9 but is 18.6% above a year ago.

Yun projects the extended and expanded tax credit will encourage 2.4 million households to take the credit in 2010. “While new-home sales will remain low due to a lack of construction, existing-home sales are projected to rise to around 5.6 million in 2010,” Yun said. Last year there were 5.16 million existing-home sales.

He added that one of the greatest benefits of rising sales will be firming home prices. “For several months now we’ve been seeing stabilization in all of the home price measures as inventory is pulled down,” Yun said. “As a result, the housing wealth for many middle class families has begun to stabilise.”

Sales of existing houses dropped 17% in December, almost matching the record decrease in pending purchases the prior month, the Realtors reported last week.