LA Real Estate Advice: Pending Home Sales Rise 5.3% in March

Westside LA Real Estate Advice: Highest level since Oct. and a 21 percent rise from same month a year ago.

The number of buyers who signed contracts to purchase homes surged more than expected in March, another sign that government incentives are propelling the housing market this spring.

The National Association of Realtors said Tuesday its seasonally adjusted index of sales agreements for previously occupied homes rose 5.3 percent from a month earlier to a reading of 102.9.

It was the highest level since October and a 21 percent increase from the same month a year earlier. February’s reading was revised upward slightly to 97.7. Economists surveyed by Thomson had expected the index would rise 4 percent to 101.5.

The index provides an early measurement of sales activity because there is usually a one- to two- month lag between a sales contract and a completed deal.

Pending sales surged by 13 percent in the South, 2 percent in the West and 1 percent in the Midwest. They fell 3.3 percent in the Northeast.

The federal government has provided a big boost to home this spring by offering first-time buyers a tax credit of 10 percent of the purchase price, up to $8,000. There is also a credit of 10 percent, up to a maximum of $6,500, for homeowners who buy and move.

These incentives stimulated home sales, but the deadline was April 30. Under a newly enacted California law, a homebuyer may receive up to $10,000 in tax credits as a first-time homebuyer or buyer of a property that has never been occupied.  The new California law applies to certain purchases that close escrow on or after May 1, 2010 (see Cal. Rev. & Tax Code section 17059.1(a)(4)).  This will replace the federal tax credit in California.

Source: Associated Press