- The Washington Times - Monday, May 4, 2009

UPDATED:

Pending home sales increased in March, with help from first-time buyers taking advantage of low costs and a federal tax benefit, the National Association of Realtors said Monday morning.

The number of signed contracts last month increased 3.2 percent from February and 1.1 percent from March 2008, according to the group’s Pending Home Sales Index, which is based on family income, home prices and mortgage rates.

This increase could be the leading edge of first-time buyers responding to very favorable affordability conditions and [the federal] $8,000 tax credit, said Lawrence Yun, a chief economist for the group.

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However, the housing market needs several more months of sustained growth to demonstrate a recovery, which is necessary for the overall economy to turn around, he said.

A family earning $61,100 could afford a home costing $291,600 in March with a 20 percent down-payment, assuming 25 percent of gross income is devoted to mortgage principal and interest, the report stated.

Buyers also are taking advantage of low interest rates, including fixed rates for 30-year mortgages now fluctuating around 4.75 percent.

Compared to a year ago, the typical family can pay much less in mortgage costs for the same home, or buy a better home without necessarily increasing their monthly payment, said Charles McMillan, the group’s president and a broker with Coldwell Banker Residential Brokerage, in Dallas-Fort Worth.

The group lists a sale as “pending” when a contract has been signed but the transaction has not closed.

The report was release about 30 minutes after U.S. markets opened and as the federal government reported an increase last month in construction spending.

The Commerce Department reported construction spending increased 0.3 percent in March, compared to the $967.1 billion spent in the previous month.

However, the $969.7 billion spent in March was 11.1 percent below the $1,090.5 billion spent in March 2008.

Construction spending for the first quarter of 2009 was $209.5 billion, 10.9 percent below the $235.2 billion for the same period in 2008.

The agency broke down the spending into private and public construction.

Private construction was at $661.0 billion last month, 0.1 percent below the $661.6 billion spent in February.

Government spending on construction, including highway projects, in March was $308.7 billion — a 1.1 percent more than the $305.4 billion spent in February.

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