U.S. Pending Home Sales Rise More Than Expected In March

4/28/2011

(RTTNews) - Pending home sales in the U.S. increased for the second consecutive month in March, according to a report released by the National Association of Realtors on Thursday, with pending sales rising by much more than economists had anticipated.
NAR said its pending home sales index rose 5.1 percent in March following a downwardly revised 0.7 percent increase in February. Economists had expected the index to increase by about 1.7 percent compared to the 2.1 percent increase originally reported for the previous month.
A pending home sale is one in which a contract was signed but not yet closed. Normally, it takes four to six weeks to close a contracted sale.
Despite the monthly increase, pending home sales are down by 11.4 percent compared to the same month a year ago, although NAR noted that activity was at elevated levels in March and April of 2010 to meet the contract deadline for the home buyer tax credit.
Lawrence Yun, NAR chief economist, said, "Since reaching a cyclical bottom last June, pending home sales have posted an overall gain of 24 percent and demonstrate the market is recovering on its own."
"The index means modest near-term gains in existing-home sales are likely, which would be even stronger if tight mortgage lending criteria returned to normal, safe standards," he added.
The monthly increase in pending home sales was partly due notable growth in the South, where pending home sales jumped by 10.3 percent.
Pending home sales in the West and the Midwest also rose by 3.1 percent and 3.0 percent, respectively, while pending sales in the Northeast fell by 3.2 percent.
Yun said, "Based on the current uptrend with very favorable affordability conditions, rising apartment rents and ongoing job creation, existing-home sales should rise around 5 to 10 percent this year with sales growth of lower priced homes likely to outperform high-end homes."
Last week, NAR released a report showing that existing home sales rebounded by more than expected in March after showing a steep drop in February.
The report said existing home sales rose by 3.7 percent to an annual rate of 5.10 million in March after falling by 8.9 percent to a revised 4.92 million in February. Economists had expected existing home sales to rise to 5.00 million from the 4.88 million originally reported for the previous month.