Sales contracts for previously owned homes rise 8.2% in February

The increase in the National Assn. of Realtors’ pending home sales index is a sign that the government’s extended tax credit for buyers may bolster sales this spring.

This home in Palo Alto. Pending sales of previously owned homes rose 21.8% in the Midwest, 9.2% in the South and 9% in the Northeast in February, but fell 4.8% in the West in February, according to the National Assn. of Realtors. (Paul Sakuma / Associated Press / April 5, 2010)

The number of previously owned homes placed under sales contract surged 8.2% in February, according to data released Monday, the first sign that the government’s extended tax credit for buyers may bolster sales this spring.

The National Assn. of Realtors said Monday that its pending home sales index, a forward-looking measure based on contracts signed, rose to 97.6 in February from a downwardly revised 90.2 in January. That was 17.3% above February 2009, when the index was at 83.2.

A reading of 100 is equivalent to the amount of activity hit during 2001, when home prices began their record climb and when the data were first measured.

“I don’t expect a vigorous market resurgence or a sharp, new rise in home prices,” said Michael D. Larson, a housing and interest rate analyst with Weiss Research.

“Foreclosure inventory will continue to be doled out into the market over the next year or two, taking some vigor out of this recovery,” Larson said. “But it will be a recovery nonetheless, one warmly welcomed by battered home sellers, banks and home builders.”

The Midwest notched the biggest increase, rising 21.8%. Pending sales climbed 9.2% in the South and 9% in the Northeast, but fell nearly 4.8% in the West.

Sales nationally have plummeted for three consecutive months beginning in December after surging last fall as buyers rushed to take advantage of the government’s credit for first-time purchases before its initial November expiration.

Congress extended that incentive of as much as $8,000 for first-time borrowers through the end of April and expanded it to include as much as $6,500 for some current homeowners.

Contracts signed typically lead to closings in one or two months, although distressed sales such as foreclosure sales and short sales often can take longer.