Pending home sales, a measure of home contract signings, shot up in the month of November, reaching its highest level on record in two-and-a-half years, the National Association of Realtors said. It's also the third consecutive month of sales increases.

The NAR Pending Home Sales Index doesn't measure home closings, but it does function as a forward-looking indicator by studying real estate contracts signed in order to gauge future closing levels.

The index rose 1.7% to 106.4 in November, up from 104.6 in October and is 9.8% above an index score of 96.9 last year.

The index is at its highest level since reaching a score of 111.3 in April 2010, according to NAR. At the time, the nation's housing market was still experiencing a sales rush from the homebuyer-tax credit.

The last time the housing market was healthy without stimulus was February 2007, NAR added.

"Even with market frictions related to the mortgage process, home contract activity continues to improve," said Lawrence Yun, NAR's chief economist. "Home sales are recovering now based solely on fundamental demand and favorable affordability conditions."

Source: Kerry Ann Panchuk