WASHINGTON Contracts to buy previously owned U.S. homes rose in March for the first time in nine months, a sign the housing market could be stabilizing after suffering a setback from a rise in interest rates and a severe winter.
The National Association of Realtors said on Monday its Pending Home Sales Index, based on contracts signed last month, increased 3.4 percent to 97.4. The increase beat economists' expectations for a 1.0 percent advance.
These contracts usually become sales after a month or two, and March's rise suggested home resales could rebound in the months ahead.
Sales stumbled last summer after that the U.S. Federal Reserve signaled it would soon reduce its economic stimulus efforts, pushing interest rates higher. A harsh winter also helped keep potential buyers out of the market.
"The stronger pending home sales report hints at resurgence in housing market momentum during the typically busier spring buying season," said Gennadiy Goldberg, a strategist at TD Securities.
Goldberg said the data suggested housing would continue to support U.S. economic growth in the coming months.
The U.S. economy hit a slow patch over the winter, which was particularly harsh in much of the country, but growth is expected to rebound during the rest of 2014. The U.S. Labor Department is expected to report on Friday the economy created 210,000 jobs in April.
Prices for U.S. stocks opened higher on Monday, while the yield on 30-year U.S. government bonds rose following the release of the housing data.
Existing home sales had fallen to their lowest levels in more than 1-1/2 years, but details of Monday's report suggested the downward trend in sales had probably run its course, with housing inventory rising and more first-time buyers coming into the market.
Despite last month's surge, pending home sales were still down 7.9 percent compared to March of last year.
Contracts increased in the Northeast, in the South and in the West. They fell in the Midwest.
(Reporting by Lucia Mutikani and Jason Lange; Editing by Paul Simao)