After a Decline in January, Pending Home Sales Increase in February

Pending home sales rose in February, potentially signaling a second surge of sales in response to the looming homebuyer tax credit deadline, the ""National Association of Realtors"":http://www.realtor.org/ (NAR) reported Monday.

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NAR's Pending Home Sales Index (PHSI), a forward-looking indicator based on contracts signed during the month, jumped 8.2 percent in February to 97.6 from a downwardly-revised 90.2 in January. The index was also 17.3 percent above February 2009 when it was 83.2.

Lawrence Yun, NAR chief economist, said this improvement is another hopeful sign for the housing market and may signal the early stages of a second surge of homes sales this spring.

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""The healthy gain hints home prices are continuing to flatten,"" he said. ""We need a second surge to meaningfully draw down inventory and definitively stabilize home values.""

February's PHSI varied from region to region. In the Northeast the index rose 9 percent to 77.7 and was 18.9 percent higher than February of last year. Pending home sales in the Midwest soared 21.8 percent to 97.9 and was 18.7 percent above a year ago. The index in the South increased 9.2 percent to an index of 107 and was 17.5 percent higher than February 2009. Posting the only month-to-month decrease, the index in the West fell 4.8 percent to 98 but was still 14.6 above a year ago.

Yun said the decline in the West was not due to a lack of demand; rather, he said it was due to a lack of inventory of lower-priced homes. ""People want to buy, but they are having difficulty finding that right home,"" he explained.

Looking forward, Yun said activity may continue to increase. ""Anecdotally, we're hearing about a rise of activity in recent weeks with ongoing reports of multiple offers in more markets, so the March data could demonstrate additional improvement from buyers responding to the tax credit,"" he said.