Pending home sales, based on contracts signed in April, were up 6.7% from March to a reading of 90.3 on the National Association of Realtors' Pending Home Sales Index (PHSI), 3.2% above April 2008's 87.5, the organization reported Tuesday. The increase was well above the range of 85 expected by economists.

Gains were led by the Northeast, where the April PHSI jumped 32.6% to a reading of 78.9, but that gain put the region only 0.8% ahead of last April. The Midwest rose 9.8% to 90.4, 11.1% ahead of a year ago. The West was up only 1.8% to 94.8, which was 2.9% below April 2008. The South was down marginally, by 0.2%, to 93.0 but remained 3.5% ahead of last April.

"Housing affordability conditions have been at historic highs, but now the $8,000 first-time buyer tax credit is beginning to impact the market," said Lawrence Yun, NAR chief economist. "Since first-time buyers must finalize their purchase by November 30 to get the credit, we expect greater activity in the months ahead, and that should spark more sales by repeat buyers."

The Realtors' affordability index rose to 174.8 in April from an upwardly revised 171.9 in March, the second highest monthly reading on record after a 176.9 in January of this year. A median-income family, earning $60,900, could afford a home costing $296,800 in April with a 20% downpayment, assuming 25% of gross income is devoted to mortgage principal and interest. The affordable price exceeded the median existing single-family home price in April, which was $169,800.

The Realtors cautioned, however, that the sample size for deriving the PHSI is smaller than that for its report on existing home sales, making the numbers subject to wider variance. It also noted that the time between a property going to contract and actually closing is increasing due to tougher scrutiny of mortgage applications and a larger number of short-sales that require lender approval. These factors also lead to more sales falling through.

Still, April was the third consecutive month with an increase in the PHSI, a trend which NAR expects to continue, albeit with wide regional variations."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," said Yun.

Michael Rehaut, home building anaylst at J.P. Morgan, viewed the number as only a "modest positive." In a research note, he wrote, "...this is consistent with some recent commentary from builders that April was stronger sequentially from March, we believe in part due to some seasonality, a pickup in foreclosure transactions, and some help from Federal and state tax credits." He added, however, "We believe demand is still relatively weak, and moreover, we believe the coming summer months could see a pullback in demand due to seasonality, the expiration of the CA and Federal tax credits, and additional foreclosures coming to market due to the recent ending of the Fannie Mae-induced foreclosure moratorium, which should add to the already elevated inventory levels in the market."