WASHINGTON - The number of Americans who signed contracts to buy homes rose in March to the highest level in three years, pointing to higher sales this spring.
The National Association of Realtors said Monday that its seasonally adjusted index for pending home sales rose 1.5 percent to 105.7. That’s the highest since April 2010, when a home buyer’s tax credit drove higher sales.
It’s also above February’s reading of 104.1.
“Now that the housing recovery is sustainable, it’s not about whether it’s up, it’s how fast,” Jonathan Basile, director of U.S. economics at Credit Suisse in New York, said before the report was released.“There’s now a different environment as unemployment continues to make new lows and we have persistently low interest rates.”
There is generally a one to two-month lag between a signed contract and a completed sale. Contract signings rose in the South, West and Midwest, and were unchanged in the Northeast.
Steady job gains and near record low mortgage rates have helped drive home sales up over the past year. Signed contracts are 7 percent higher than the same month a year earlier.
“Job additions and rising household wealth will continue to support housing demand,” National Association of Realtors chief economist Lawrence Yun said in a statement accompanying the release. Because of limited availability of properties, “little movement is expected in near-term sales closings, but they should edge up modestly as the year progresses.”
But completed sales have slowed in recent months - and dipped in March - be-cause of a limited supply of available homes on the market. The number of homes for sale has fallen nearly 17 percent in the past year to 1.93 million, the Realtors’ group said last week. At the current sales pace, that supply would be exhausted in 4.7 months, below the 6 months that is typical in healthier markets.
Buyer traffic is 25 percent higher than it was a year ago. Rising demand and low supply is fueling more home construction.
U.S. builders started work on more than 1 million homes at an annual rate in March. That’s the first time the pace has topped that threshold in nearly 5 years.
The housing recovery is helping increase economic growth this year. Builders are starting work on more homes, creating more construction jobs. And home prices are rising. Higher prices tend to make homeowners feel wealthier and encourage more spending.
Mortgage rates, meanwhile, remain near record lows. The average rate on the 30-year fixed mortgage fell to 3.40 percent last week, from 3.41 percent. That’s not far from the record low of 3.31 percent, reached in November
The average rate on the 15-year fixed mortgage fell to 2.61 percent last week, the lowest on records dating back to 1991.
Information for this article was contributed by Christopher S. Rugaber of The Associated Press and Alex Kowalski and Alex Tanzi of Bloomberg News.
Business, Pages 23 on 04/30/2013