More Americans signed contracts in March to buy previously owned homes before the expiration of a tax credit that has helped support the housing market.
The index of signed purchase agreements, or pending home resales, rose 5.3%, to 102.9, after gaining 8.3% in February, the National Association of Realtors said Tuesday in Washington. Economists had projected a 5% gain, according to the median of forecasts in a Bloomberg survey.
The housing market, which triggered the worst recession since the 1930s, has received a boost from a tax incentive of up to $8,000 for buyers who signed purchase contracts by the end of April. Job gains are needed to help sustain demand and limit foreclosures in the absence of government aid, and to broaden the economic recovery.
"More people came in to beat the rush," Stephen Gallagher, chief U.S. economist at Societe Generale SA in New York, said before the report. "Sales are rising at a pretty healthy clip. There's growing confidence that the job market has bottomed out and is crawling up again."
Sales had been expected to rise in March after the originally reported gain of 8.2% in February. The 5% median of 39 forecasts in the Bloomberg survey came on growth estimates ranging from 0.9% to 9%.
Pending home resales are considered a leading indicator because they track contract signings. The Realtors' existing-home sales report tallies closings, which typically occur a month or two later. The Realtors group, whose pending sales data go back to January 2001, started publishing the index in March 2005.
Three of four regions saw growth, Tuesday's report showed. This included a 13% gain in the South, 1.9% in the West and 1.2% in the Midwest. Pending sales fell 3.3% in the Northeast.
Compared with March 2009, pending sales rose 24%.
Sales of previously owned homes, which account for about 90% of the housing market, rose 6.8% in March.
New-home purchases, which make up the rest of the market and are tabulated when a contract is signed, surged 27% in March, the biggest jump since 1963, Commerce Department figures showed on April 23.
The tax credit for first-time homebuyers was extended in November to include some current owners and requires buyers to close their transactions by June 30.
"Clearly the homebuyer tax credit has helped stabilize the market," Lawrence Yun, the Realtors group's chief economist, said in a press release. "Later in the second half of the year, and into 2011, home sales will likely become self-sustaining if the economy can add jobs."
Yun said sales will be "measurably lower" in the months immediately after the tax incentive expires.
Foreclosures will remain a headwind for the housing industry. Filings rose 16% in the first quarter from a year earlier, and bank seizures set a record, according to RealtyTrac Inc. in Irvine, Calif.