The number of Americans signing contracts to buy previously owned homes climbed 6.7% in April, more than forecast and the fourth increase in five months, as lower prices attracted buyers.
The gain in the index of signed purchase agreements, or pending home resales, was the biggest in more than seven years and followed a 3.2% increase in March, the National Association of Realtors said Tuesday.
The April reading was up 3.2% from the same month a year earlier.
"The market is crawling back and maybe the turn is here," said Ken Mayland, the president of ClearView Economics LLC in Pepper Pike, Ohio, whose projected 4% gain was the highest in a Bloomberg survey.
"Foreclosures are moving through the system and that is a fundamental part of the process of restoring equilibrium in the housing market," Mayland said.
Pending resales are considered a leading indicator because they track contract signings.
The Realtors' report on sales of existing homes tallies closings, which typically occur a month or two later.
The agent group, whose data on pending home resales goes back to January 2001, started publishing the index in March 2005.
The gains in pending sales have been larger than actual home resales in recent months, perhaps reflecting the influence of foreclosures.
Sales of distressed properties are taking longer to close because they require lender approval, Lawrence Yun, chief economist at the Realtor group, said in a press release.
Moreover, some of these contracts fall through before a transaction is completed, he said.
"The market has already bottomed in some areas, but this is an unusual housing cycle with some areas improving rapidly while others languish or decline," Yun said.
Economists forecast the index would rise 0.5% in April, according to the median of 32 projections in a Bloomberg News survey.
Estimates ranged from a 2% drop to an increase of 4%.
Pending sales rose in three of four regions, Tuesday's report showed: 33% in the Northeast, 9.8% in the Midwest and 1.8% in the West. They fell 0.2% in the South.
The Realtor group reported last week that home resales increased 2.9% in April, buttressing the case that the industry's slump, now in its fourth year, would end in 2009.