A “broad-based recovery” in demand for existing homes continued in March, when an index of pending home sales based on contracts signed that month rose to 102.9, 5.3% over February, according to the National Association of Realtors (NAR).

March was the third consecutive month during which NAR’s Pending Homes Sales Index increased, and that month’s index was 21.1% higher than in March 2009.

Lawrence Yun, NAR’s chief economist, said in a videotaped interview on the association’s website that the Index was up 31% year to date, and that most markets tracked showed strong gains. He attributed the declines in some markets, like Sacramento and Ft. Myers, Fla., to comparisons with “robust activity last year.” Yun also noted that some markets had fewer contracts signed because they are experiencing shortages in available housing stock, even with foreclosures.

Regionally, the Index for the Northeast was down 3.3% compared to February but up 27.2% over March 2009. (The Index in Massachusetts alone, however, rose for the 10th consecutive month.) The Index for the Midwest rose 1.2% month-over-month and 18.5% year-over-year. In the South, the Index jumped 12.7% in March over February and by 28.3% over March 2009. And in the West the March Index inched up 1.9% over February and by 8.8% from a year ago.

The federal home buyer tax credit helped stabilize markets around the country, observed Yun. “Price stabilization has completely removed the consumer’s fear factor from the market.” However, with that tax credit expiring on April 30, “the housing industry will now have to stand on its own feet.” Consequently, Yun suggests that the Index could be “measurably lower” in July and August, before it revives again in the fall and winter.

Yun is encouraged by the increasing availability of bank financing for jumbo mortgages and second homes, and believes that existing home sales would continue to grow into 2011 and 2012 at a “normal” pace, by which he means single-digit percentages. Whether that growth accelerates or not will depend on several factors, including the willingness of builders to ramp up their production. If they don’t, “you could see some housing shortages two or three years from now,” he predicted.

John Caulfield is senior editor for BUILDER magazine.

Learn more about markets featured in this article: Washington, DC.