NAR chief economist Lawrence Yun says the rise in pending home sales is a result of better housing affordability and the homebuyer tax credit, but he expects sales to decline in the months ahead following the expiration of the tax credit. “Clearly the homebuyer tax credit has helped stabilize the market. In the months immediately following the expiration of the tax credit, we expect measurably lower sales. Later in the second half of the year and into 2011, home sales will likely become self-sustaining if the economy can add jobs at a respectable pace and from a return of buyer demand as they see home values stabilizing,” Yun says.

The index rose in three of the four regions from February to March, and all four regions year-over-year. In the Midwest, it increased 1.2 percent in March from the previous month and was 18.5 percent higher than a year ago. In the South, the index jumped 12.7 percent in March and was 28.3 percent higher than March 2009. Pending sales in the West rose 1.9 percent during the month and were 8.8 percent above a year ago. But pending sales in the Northeast declined 3.3 percent in March, although they were 27.2 percent higher than a year ago.

The index in the Northeast rose 2.3 percent in December and was 14.9 percent higher than December 2008. In the Midwest, the index increased 5.2 percent and was 8.7 percent higher than a year ago. In the South, pending home sales rose 2.2 percent and were 5.5 percent higher than December 2008. In the West, the index fell 3.8 percent but was 18.6 percent above a year ago.

NAR chief economist Lawrence Yun says it’s important to recognize how the tax credit is skewing market data. “There are easily understood swings in contact activity as buyers respond to a tax credit that was expiring and was then extended and expanded. These swings are masking the underlying trend, which is a broad improvement over year-ago levels. December activity was the fifth highest monthly tally in two years,” Yun says.

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