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US March pending home sales jump 3.8% in second gain this year

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Contract signings to purchase previously owned US homes rebounded in March by more than forecast for the second gain in three months, adding to signs of stabilisation in the housing market.

[WASHINGTON] Contract signings to purchase previously owned US homes rebounded in March by more than forecast for the second gain in three months, adding to signs of stabilisation in the housing market.

The index of pending home sales jumped 3.8 per cent from the prior month, after a 1 per cent decrease in February, according to data released Tuesday by the National Association of Realtors in Washington. The gauge was down 3.2 per cent from a year earlier on an unadjusted basis.

The data suggest sustained wage gains, lower mortgage rates and more affordable housing options are attracting home buyers. That's helping to steady the market after last year's slump.

At the same time, other data have shown a mixed picture of the US housing market. Sales of previously-owned homes fell last month while purchases of new homes rose to a 16-month high.

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A separate report Tuesday showed home prices in 20 US cities rose in February at the slowest pace since 2012, decelerating for an 11th straight month. The improved affordability could be one of the factors driving recent demand.

Pending home sales are often looked to as a leading indicator of existing home sales, which make up 90 per cent of the market. Since sales are counted once a deal closes, the measure can be a good indicator of the health of the housing market in the next couple of months.

"We are seeing a positive sentiment from consumers about home buying, as mortgage applications have been steadily increasing and mortgage rates are extremely favorable," NAR Chief Economist Lawrence Yun said in a statement. While the overall market is still underperforming, there is pent-up demand that should drive gains in the coming quarters and years, he said.

Contracts rose from the prior month in three of four regions, led by an 8.7 per cent increase in the West, the biggest gain since 2010.

Pending sales fell 1.7 per cent in the Northeast, the second straight drop.

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