More Americans than forecast signed contracts in March to buy previously owned homes, another indication of progress in the housing market.
The index of pending home sales increased 1.5% after a revised 1% decline the prior month that was larger than initially reported, figures from the National Association of Realtors showed today in Washington. Economists forecast a 1% increase, according to the median estimate in a Bloomberg survey.
Historically low borrowing costs and improvement in the labor market are helping power the housing market, boosting home prices and spurring the economic expansion. A pickup in property values may prompt more Americans to put their homes on the market and help alleviate a limited supply of available dwellings as the spring selling season begins.
“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. “There’s now a different environment as unemployment continues to make new lows and we have persistently low interest rates.”
Estimates for pending home sales ranged from a decline of 1.5% to an increase of 2%, according to 34 economists surveyed by Bloomberg.
Another report today showed consumer spending rose more than projected in March, reflecting a jump in outlays for services that is unlikely to be repeated as the biggest part of the economy softens this quarter.
Household purchases, which account for about 70% of the economy, climbed 0.2% after a 0.7% gain the prior month, the Commerce Department said in Washington. The median estimate in a Bloomberg survey of 74 economists called for spending to be little changed. Incomes increased less than forecast and inflation cooled to the lowest level in more than three years.
Today’s Realtors’ report showed pending home sales climbed 5.8% from March 2012 on an unadjusted basis.
Three of four regions showed an increase in contract signings from a month earlier, led by a 2.7% gain in the South. Pending home sales climbed 1.5% in the West and 0.3% in the Midwest. They were unchanged in the Northeast.
The index level for pending home sales was 105.7 on a seasonally-adjusted basis, the highest since April 2010. A reading of 100 coincides with the average level of contract activity in 2001 and “historically healthy” home-buying traffic, according to the NAR.