Pending Home Sales Jump

By JEFF BATER And MEENA THIRUVENGADAM - WSJ

U.S. pending home sales rose in April beyond expectations as buyers signed contracts to collect a government tax credit.

The National Association of Realtors' index for pending sales of used homes increased by 6.0% to 110.9 in April, the industry group said Wednesday. The gain was the third in a row.

Economists surveyed by Dow Jones Newswires had expected pending home sales would climb in April by 5.0%. First-time home-buyers rushed to beat the April 30 deadline for the tax credit.

The incentive was an extension of a subsidy originally enacted in February 2009. Lawrence Yun, NAR's chief economist, said sales this spring seem as strong as those last fall, before the original expiration date.
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"There were concerns that only a small pool of buyers were left to take advantage of the tax credit extension," he said. "But evidently the tax stimulus, combined with improved consumer confidence and low mortgage interest rates, are contributing to surging sales."

Year-over-year, the index was 22.4% above its level of 90.6 in April 2009.

March pending home sales were revised up, with the index rising 7.1% to 104.6. Originally, NAR said the gauge rose 5.3% to 102.9.

The NAR index is based on pending sales of existing homes, including single-family homes and condominiums. A home sale is pending when the contract has been signed but the transaction hasn't closed. Pending sales typically close within one or two months of signing.

Analysts have expressed fear the housing market will suffer with the end of the government subsidy. But the job market has been improving. The Labor Department is scheduled this week to release employment data for May, and economists surveyed by Dow Jones Newswires are expecting a gain of 515,000 non-farm payroll jobs.

In its monthly forecast on the industry, the NAR projected existing-home sales of 5.39 million this year and 5.66 million in 2011. That compares with 5.16 million in 2009.

"The housing market has to get back on its own feet and now appears to be in a good position to return to sustainable levels even without government stimulus, provided the economy continues to add jobs," Mr. Yun said.

Aside from low mortgage rates, historically low prices have helped sales, too. The median price for an existing home is estimated at $174,500 in 2010 and $180,400 in 2011. It was $172,500 in 2009.

By region, pending sales in the Northeast rose 29.5% in April and were 24.5% higher than a year earlier.

The Midwest increased 4.1% in April and were 17.9% higher than a year earlier.

Pending sales in the South fell 0.6% in April but were 31.3% above the level a year earlier.

The West rose 7.5% in April and were 12.0% higher than a year earlier.