Perhaps the spring selling season will bloom after all.
According to data released Monday by the National Association of Realtors (NAR), pending home sales jumped 8.2% on a monthly basis in February to an index reading of 97.6. This indicator, which measures contracts signed for purchases of existing homes, represents one of the few positive housing statistics published in recent weeks: Builder confidence, construction spending, housing starts, and both new and existing home sales have all showed weakness.
But today’s NAR numbers suggest that spring may bring at least a temporary bounce to the housing market, particularly given the April 30 deadline for qualifying for the tax credit by signing a home-purchase contract.
“The rise in buyer contact activity may signal the early stages of a second surge of home sales this spring,” said Lawrence Yun, NAR’s chief economist, adding: “Anecdotally, we’re hearing about a rise of activity in recent weeks with ongoing reports of multiple offers in more markets, so the March data could demonstrate additional improvement from buyers responding to the tax credit.”
The NAHB’s chief economist, David Crowe, sounded a similar note in the NAHB’s Eye on Housing blog. “The 2010 version of the credit has taken longer to show any buyer urgency , but the rise does provide evidence that home buyers are aware of the April 30 deadline for a contract signing,” Crowe wrote. “If the pattern repeats itself in 2010 as it did in 2009, then the index should see another significant bump in March, but then settle down as the deadline passes and some of the time-shifting in sales softens contract signing in late spring and early summer.”
On an annual basis, the February reading for the NAR’s pending home sales index was 17.3% higher than the same month one year ago.
Alison Rice is senior editor, online, at BUILDER magazine.