Ahead of Tax Credit Deadline, Pending Home Sales Gain Again

Pending home sales rose for the second month in March, as buyers rushed to sign contracts leading up to the April 30 expiration of the homebuyer tax credit, according to the National Association of Realtors (NAR). NAR’s pending home sales index increased 5.3% from February to March. This year’s pending sales were up 21.1% from March 2009. In February, pending sales were up 8.3% year-over-year. The index is a measure of home sales contracts that typically close one or two months after signing. It’s based on a national sample that typically represents about 20% of existing-home sales transactions and is a leading indicator of future home sales. NAR chief economist Lawrence Yun said the homebuyer tax credit is responsible for boosting sales. “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.” “Another encouraging sign is the improvement in the availability for jumbo and second-home mortgages,” Yun added. “As bank balance sheets strengthen, it is just a matter of time before lending of non-government-backed mortgages steadily opens up.” Regionally, pending sales increased the most in the South, where the 12.7% month-over-month increase put pending sales 28.3% above the March 2009 level. In the West, the index increased 1.9% month-over-month, bringing pending sales up 8.8% from one year ago. The index increased 1.2% in the Midwest and is now 18.5% above a year ago. The Northeast was the only region to experience a decline, down 3.3% from February. However, pending sales in the Northeast are 27.2% above March 2009’s level. Write to Austin Kilgore.

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