Pending home sales race to 6-month high

Pending sales of previously owned homes rose more than expected in April, scaling a six-month high as prospective home owners took advantage of a popular homebuyer tax credit, a survey showed on Wednesday.
By: Lucia Mutikani, Editing by Chizu Nomiyama: Reuters.com
The National Association of Realtors said its Pending Home Sales Index, based on contracts signed in April, increased 6.0 percent to 110.9, the highest since October.

It was the third straight month of gains in the index, which leads existing home sales by a month or two. Pending home sales rose by a revised 7.1 percent in March, a figure previously reported as a 5.3 percent increase.

Analysts polled by Reuters had forecast pending home sales rising 5.0 percent in April.

Compared to April 2009, the index was 22.4 percent higher.

Pending home sales were boosted by a government tax credit for home buyers. Prospective buyers had to sign contracts by the end of April and close by the end of June to be eligible for a federal tax credit.

Pending home sales are measured at the time of contract signing. Existing home sales, which are counted at contract closing, are likely to increase until next month.

Given that the tax credit has pulled forward some sales, activity is expected temporarily slacken, but the strengthening economy and job market are seen supporting the housing market in the absence of additional government aid.

"The housing market has to get back on its own feet and now appears to be in a good position to return to sustainable levels even without government stimulus, provided the economy continues to add jobs," said Lawrence Yun, chief economist with the NAR.