Pending home sales rose 5.1 percent in March

A 'sale' sign outside a home in Alexandria, Virginia, July 22, 2010.

WASHINGTON (Reuters) - Pending sales of existing U.S. homes were much stronger than expected in March and a homebuilding company trimmed losses, offering faint glimmers of hope for the depressed U.S. housing market.

Pending home sales rose 5.1 percent last month, the National Association of Realtors said on Thursday. NAR's Pending Home Sales Index rose to 94.1 from 89.5 in February. The index, which has risen for two months in a row, was at its highest since November.

Economists polled by Reuters ahead of the report were expecting pending home sales to rise by 1.5 percent.

The association's senior economist, Lawrence Yun, said the data show the downtrodden housing market is stirring without the benefit of government programs that spurred gains last year.

"The market is recovering on its own," Yun said. "Modest near-term gains in existing-home sales are likely."

February's pending home sales gains were revised down to a 0.7 percent rise from the previously reported 2.1 percent gain.

In other evidence that housing market woes may be settling, home builder Pulte Group Inc reported a smaller-than-expected quarterly loss. The nation's second largest home builder said order cancellations had fallen and that it did not need to offer more incentives to lure customers.

The Realtors' strong sales report is line with stepped up mortgage applications in March, Barclays Capital economist Theresa Chen said.

"Pending home sales have continued on an upward trend after the trough in June," she said. "We look for the housing market to recover further in the near term, albeit at a gradual pace."

(Reporting by Mark Felsenthal, Editing by Chizu Nomiyama)