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[WASHINGTON] More Americans than forecast signed contracts to purchase previously owned homes in February, indicating a pickup in the housing market ahead of the spring selling season.
The index of pending sales increased 3.1 per cent to 106.9, the highest since June 2013, after a 1.2 per cent gain the prior month that was smaller than initially estimated, figures from the National Association of Realtors showed Monday in Washington. The median forecast of 35 economists surveyed by Bloomberg called for a 0.3 per cent rise.
Employment gains and rising rents encouraged buyers to take advantage of cheap borrowing costs in February even as some contended with frigid weather. Stronger wage growth and an increase in the number of homes for sale would help provide an additional boost for the market this spring, when buying interest typically heats up.
"Pending sales showed solid gains last month, driven by a steadily improving labour market, mortgage rates hovering around 4 per cent and the likelihood of more renters looking to hedge against increasing rents," Lawrence Yun, the NAR's chief economist, said in a statement.
"These factors bode well for the prospect of an uptick in sales in coming months."
Estimates in the Bloomberg survey ranged from a 5 per cent decline to a 2 per cent increase. The Realtors' group revised the January data from a previously reported 1.7 per cent increase.
Two of four regions saw an increase, reflecting an 11.6 per cent jump in the Midwest and a 6.6 per cent gain in the West, the report showed. Pending sales fell 2.3 per cent in the Northeast and 1.4 per cent in South.
Last Year The index increased 12 per cent on an unadjusted basis versus a year earlier, after a 6.1 per cent gain in the prior 12- month period. It was projected to climb 8.7 per cent, according to the Bloomberg survey median.
A reading of 100 in the pending sales index corresponds to the average level of contract activity in 2001, or "historically healthy" home-buying traffic, according to the NAR.
Economists consider pending sales a leading indicator because it tracks contract signings, as opposed to purchases of existing homes, which are tabulated when a deal closes, typically a month or two later.
The latter makes up more than 90 per cent of the housing market. Re-sales rose 1.2 per cent in February to a 4.88 million annual rate, the NAR said March 23.
A report from the Commerce Department on March 24 showed new-home sales, which account for about 7 per cent of the residential market, unexpectedly rose in February to a seven- year high. New-home sales are also tabulated when contracts are signed, indicating the market strengthened during the month.