- The Washington Times - Tuesday, June 2, 2009

Pending home sales increased in April for the third straight month as a result of low mortgage rates and a federal tax benefit, the National Association of Realtors said Tuesday morning.

The number of signed contracts last month increased by 6.7 percent from March and 3.2 percent from April 2008, according to the group’s Pending Home Sales Index, which is based on family income, home prices and mortgage rates.

Mortgage rates reached a record low of 4.78 percent in late April.

“Housing affordability conditions have been at historic highs, but now the $8,000 first-time-buyer tax credit is beginning to impact the market, said Lawrence Yun, the group’s chief economist.

Mr. Yun also expects home buying to increase over the next couple of months because deals must be closed by November 30 to apply the credit.

The biggest increases came in the Northeast, where the April index increased by 32.6 percent compared to March and by 0.8 percent compared to April 2008.

In the Midwest, the April index increased by 9.8 percent compared to the previous month and by 1.11 percent compared to April 2008.

The index for pending sales in the South decreased by 0.2 percent in April but increased 3.5 percent compared to a year ago. In the West, the index increased by 1.8 percent compared to April but decreased 2.9 percent compared to April 2008.

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

Mr. Yun said the average time for closing on a home — the difference between home sales and pending sales — is taking longer in part because many of the deals are distressed sales, which are more complex and more often fall through at the last moment.

Charles McMillan, the group’s president and a broker with Coldwell Banker Residential Brokerage in Dallas-Fort Worth, said states across the country have buyer-assistance programs that allow first-time buyers to use the tax credit for down payment and closing costs, following the federal government’s approval last week.

A median-income family earning $60,900 could afford a $296,800 home in April with a 20 percent down payment, assuming 25 percent of its gross income goes to mortgage principal and interest, the group said.

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