WASHINGTON -- Supported by a tax credit, the pending home sales index rose a seasonally adjusted 5.3 percent in March, and was up 21.1 percent compared with a year earlier, the National Association of Realtors said Tuesday.
For March, sales contracts rose 12.7 percent in the South, 1.9 percent in the West and 1.2 percent in the Midwest. Contracts declined 3.3 percent in the Northeast.
"Clearly the homebuyer tax credit has helped stabilize the market," said Lawrence Yun, chief economist for the real estate lobbying group, in a statement. "In the months immediately following the expiration of the tax credit, we expect measurably lower sales."
In order to qualify for the extended and expanded home buyer tax credit, a sales contract must have been signed by April 30 and the sale must close by June 30. Analysts expect the tax credit will also support contract signings in April.
In February, the pending home sales index rose 8.3 percent, compared with an earlier estimate of an 8.2 percent gain. The strong results in February and March likely reflect more demand before the credit expires, according to analysis from Barclays Capital Research.
"Looking ahead, the strength in pending home sales (which tend to lead closed sales by a month or two) supports our view that existing home sales will rebound over the spring, also buoyed by the forthcoming expiration of the tax credit," according to Barclays.
Yun added that home sales will "likely become self-sustaining" in the second half of this year and into 2011 if jobs are added "at a respectable pace," and as buyers see stabilizing values.
NAR's index tracks sales contracts on existing homes, and is seen to be a good indicator of actual sales, which are recorded a month or two later at closing.