In another sign that the two government tax incentives helped the housing market this spring, the number of signed contracts to purchase homes grew more than expected in March.
According to a report released today by the National Association of Realtors its seasonally adjusted index of sales agreements rose 5.3 percent from February to March to a reading of 102.9 for previously occupied homes which was the highest level since last October and a 21 percent gain from the same month a year ago.
Economists had expected that the index would rise by only 4 percent to 101.5.
The seasonally adjusted index is a measurement of sales activity for home sales in advance because there is normally a one to two month lag between signed sales contract and the close of escrow.
While pending home sales fell 3.3 percent in the Northeast they surged by 13 percent in the South, 2 percent in the West and 1 percent in the Midwest.
The two government tax incentives did provide a large boost to home sales this spring that offered first-time buyers a tax credit of 10 percent of the purchase price, up to $8,000. For homeowners who wanted to buy and move, they had access to a tax credit of 10 percent of the purchase price, up to a maximum of $6,500.
These incentives did stimulate home sales, but unfortunately they ended on April 30th. Some analysts feel that sales could drop sharply in the second half of the year now that these incentives are gone. Also some think home prices could fall as well, but now that California has a new tax incentive that was signed by Governor Schwarzenegger this past March, California could be one of the few states that have stability.