The nábrók, or "necropants" as they are known in English, were actually featured on an episode of QI (a fact-based entertainment show) and the particular artifact that is on display at the Strandagaldur Museum of Icelandic Sorcery & Witchcraft is reported as a replica in the media (one, two).
The museum describes the process for making them as follows,
If you want to make your own necropants (literally; nábrók) you have
to get permission from a living man to use his skin after his dead.
After he has been buried you must dig up his body and flay the skin of
the corpse in one piece from the waist down. As soon as you step into
the pants they will stick to your own skin. A coin must be stolen from
a poor widow and placed in the scrotum along with the magical sign,
nábrókarstafur, written on a piece of paper. Consequently the coin
will draw money into the scrotum so it will never be empty, as long as
the original coin is not removed. To ensure salvation the owner has to
convince someone else to overtake the pants and step into each leg as
soon as he gets out of it. The necropants will thus keep the
money-gathering nature for generations.
However, anthropodermic bibliopegy is the process of binding books in human skin and in fact, the Harvard Libraries have some of these books in their collection.
Arsène Houssaye’s, Des destinees de l’ame (FC8.H8177.879dc), bound in human skin.
So in theory at least, a properly tanned and preserved leather artifact could survive for a very long time in remarkable state. In fact there is at least one instance of a 5,500 year old leather moccasin-like shoe that is remarkable shape.