WASHINGTON – Contracts to purchase previously owned U.S. homes climbed in March by the most in almost three years, showing residential real estate was starting to stabilize entering the spring selling season.
The pending home sales index rose 3.4 percent, the most since May 2011 and the first gain in nine months, after a 0.5 percent drop in February that was smaller than initially reported, the National Association of Realtors said today in Washington. The median projection in a Bloomberg survey of economists called for a 1 percent increase. The gauge is 7.4 percent below a year earlier.
Housing demand has weakened since the middle of last year as rising prices and borrowing costs put ownership out of reach for some prospective buyers. An improving employment outlook and easier access to credit would help entice more house hunters to sign purchase contracts.
“The backdrop in general for housing remains reasonably positive,” said Jim O’Sullivan, chief U.S. economist at High Frequency Economics Ltd. in Valhalla, N.Y., who projected a 2.5 percent gain. “The labor market is improving, confidence generally has been edging up and mortgage rates are still pretty low.”
Estimates in the Bloomberg survey of 35 economists ranged from a 2 percent decline to a 7 percent increase after a previously reported 0.8 percent drop in February.
Stocks held gains after the figures, with the Standard & Poor’s 500 Index rising 0.7 percent to 1,876.24 at 10:04 a.m. in New York. The S&P Supercomposite Homebuilding Index advanced 2.7 percent.
Purchase contracts fell from the year prior after a 10 percent decrease in the 12 months that ended in February on an unadjusted basis. Existing-home sales are projected to total just over 4.9 million this year, less than the 5.1 million in 2013, the trade group said.
The pending sales index was 97.4. A reading of 100 is equal to the average level of contract activity in 2001, according to the Realtors group.