Pending home sales rose in February, potentially signaling a second surge of home sales in response to the homebuyer tax credit, according to the National Association of Realtors®.

The Pending Home Sales Index, a forward-looking indicator based on contracts signed in February, rose 8.2% from January, and remains 17.3% above February 2009 levels. The PHSI data reflects contracts and not closings, which usually occur with a lag time of one or two months.

NAR chief economist Lawrence Yun said the improvement is a hopeful sign. “The rise in buyer contact activity may signal the early stages of a second surge of home sales this spring. The healthy gain hints home prices are continuing to flatten,” he said. “We need a second surge to meaningfully draw down inventory and definitively stabilize home values.”

Regional data

The PHSI in the Northeast rose 9.0% in February, up 18.9% from February 2009.  In the Midwest, the index jumped 21.8% and is 18.7% above a year ago.  Pending home sales in the South increased 9.2%, which is 17.5% higher than February 2009.  In the West, the index fell 4.8%, but is 14.6% above a year ago.

“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,” Yun said.

Source: NAR