In yet another sign of stabilization within the U.S. housing market, pending home sales continued the climb upward in March, the National Association of Realtors (NAR) reported Tuesday.
NAR’s Pending Homes Sales Index (PHSI), a forward-looking indicator based on contracts signed in March, rose 5.3 percent from February and was 21.1 percent above March of last year. This increase follows an 8.3 percent jump in February and affirms that a surge of home sales is unfolding for the spring home buying season, NAR said.
The month-to-month jump in pending sales surpassed analysts’ predictions. According to a Reuters poll, analysts were expecting pending home sales to inch up just 4 percent in March.
On a seasonally-adjusted basis, pending home sales have now increased for two consecutive months. And on an unadjusted basis, March marked the third straight month of growth.
The PHSI in March varied from region to region. The index in the South surged 12.7 percent from February and was 28.3 percent above March of 2009. In the West, the PHSI increased 1.9 percent from the month prior and was 8.8 percent higher than a year earlier. The index in the Midwest nudged up 1.2 percent from February and was 18.5 percent above March of last year.
The only region to post a month-to-month decline was the Northeast, where pending home sales fell 3.3 percent. However, the PHSI in the Northeast remained 27.2 percent higher than a year ago.
Lawrence Yun, NAR chief economist, said the combination of favorable affordability conditions and the homebuyer tax credit bolstered pending home sales in March. But now that the tax credit has expired, Yun believes sales will decline in the months to come.
“Clearly the home buyer tax credit has helped stabilize the market. In the months immediately following the expiration of the tax credit, we expect measurably lower sales,” he said. “Later in the second half of the year, and into 2011, home sales will likely become self-sustaining if the economy can add jobs at a respectable pace, and from a return of buyer demand as they see home values stabilizing.”
Yun said another encouraging sign is the improvement in the availability of jumbo and second-home mortgages. He said as bank balance sheets strengthen, it is just a matter of time before lending of non-government-backed mortgages steadily opens up.