Pending home sales rise 8.2 percent in February
The housing market is coming back from the winter doldrums.
The number of buyers who agreed to purchase previously occupied homes rose sharply in February, far exceeding expectations, a report said Monday.
That's a sign that a second round of government incentives is pushing buyers to make offers before a deadline at the end of this month. Buyers may also be motivated by worries that mortgage rates will climb later this year.
The National Association of Realtors said Monday its seasonally adjusted index of sales agreements rose 8.2 percent from January to a February reading of 97.6. January's reading was revised slightly downward to 90.2.
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The report "may signal the early stages of a second surge of home sales this spring," said Lawrence Yun, the trade group's chief economist.
Economists surveyed by Thomson Reuters had expected the index would fall slightly to 90.3. The index is considered a barometer for future sales activity because there is typically a one- to two- month lag between a signed sales contract and a completed deal.
A reading of 100 is equal to the level of sales activity in 2001, when the index started.
Home sales had been sluggish during the winter, partly because shoppers felt less rushed after lawmakers extended the deadline to qualify for a tax credit. First-time buyers can get a tax break of up to $8,000 if they sign a contract by April 30. Lawmakers also added credit of $6,500 for existing homeowners who move.
The report suggests the tax credit "is finally having some renewed impact on demand," wrote Ryan Wang, an economist with HSBC Securities.
The biggest month-to-month increase was in the Midwest, where pending sales rose by nearly 22 percent. Sales posted gains of 9 percent in the South and Northeast, but fell nearly 5 percent in the West.
However, the housing market will be tested in the second half of the year as government support fades away.
Unless the tax incentive is extended again, the jump in home sales "will prove temporary, and another setback will occur before too long," wrote Joshua Shapiro, chief U.S. economist at MFR Inc.