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WASHINGTON (AP) — Home sales rose in March, reversing three months of declines, as government incentives drew in buyers and kicked off what's expected to be a strong spring selling season.
Sales of previously occupied homes rose 6.8 percent to a seasonally adjusted annual rate of 5.35 million last month, the highest level since December, the National Association of Realtors said Thursday. February's sales figures were revised downward slightly to 5.01 million.
"The spring selling season will be a success and probably the most active we're seen in years," said Stuart Hoffman, chief economist at PNC Financial Services Group.
Sales are now up 18 percent from their low in early 2009, but are still down 26 percent from their peak in fall 2005. March's results had been expected to rise about 5 percent to 5.28 million, according to economists surveyed by Thomson Reuters.
The results show the housing market is stabilizing after a devastating bust. But the true test will be whether the market can stand on its own after federal tax credits expire at the end of this month.
Sales rose in every region, surging more than 7 percent in the Midwest and South, 6.6 percent in the West and 6 percent in the Northeast.
"It's a very broad-based recovery," said Lawrence Yun, the Realtors' chief economist.
The median sales price was $170,700, up almost 4 percent from $164,600 a month earlier and nearly unchanged from $170,000 in March 2009.
The inventory of unsold homes on the market was up 1.5 percent at 3.6 million. That's an eight month supply at the current sales pace.
Sales nationally had declined over the winter, eroding gains made last fall and summer. The downward direction troubled economists because the government has taken unprecedented steps to support the housing sector.
For several months, home shoppers didn't feel rushed after lawmakers extended the deadline to qualify for tax incentives. The government is offering a $8,000 credit for first-time buyers and $6,500 for current homeowners willing to buy and move into another property.
But now time is running out. Buyers must sign contract offers by April 30 to qualify, and real estate agents say that's spurring sales.
"Many people who otherwise wouldn't be on the market for a home want to take advantage of these tax credits," said Kathi McLeod, sales manager for Windermere Real Estate in Boise, Idaho. "You have buyers who have been looking and looking at properties and realizing that it's almost too late, so they're really scrambling and jumping into deals."
The Realtors group is not pushing for an another extension of the tax credit. Yun said he believes there will be enough demand in the second half of the year without a government subsidy.
Still, some housing market experts predict the market will take a dramatic "double-dip" once the government's supports are gone. But others argue that there is enough pent-up demand to keep the market chugging. And prices have fallen dramatically since the boom years — as much as 50 percent in some places. So buyers can pick up bargain-priced foreclosures.
AP Business Writer Erin Conroy in New York contributed to this report.