There was another ray of hope Monday for the distressed housing market: the National Association of Realtors said the volume of signed contracts to buy previously occupied homes rose for the second month in a row.
Homebuyers taking advantage of bargain prices, low interest rates and a tax credit for first-time buyers pushed the seasonally adjusted index of pending sales up by 3.2 percent to 84.6 in March.
The results not only beat analysts' flat expectations, but were also 1.1 percent above last year's levels, the first time that has happened since December.
"After nearly three years of freefall, housing activity may have found a floor," wrote Paul Dales, U.S. economist with Capital Economics in Toronto.
The index tracks signed contracts to purchase previously occupied homes. Typically there is a one- to two-month lag between a contract and a done deal, so the index is a barometer for future home sales.
Hopes have been growing that home sales, while still severely depressed, may be finally showing signs of life. Sales of newly built homes were flat in March while sales of existing homes edged down slightly.
But it's not all bright news out there.
Home prices are expected to keep falling for at least another year, though at a slowing pace. Tens of thousands of homes are tied up in the foreclosure process and not yet for sale. Plus, mounting job losses may keep many buyers from signing a contract for a home.
The Realtors estimate about half of existing home sales are now foreclosures and other must-sell transactions.
Nevertheless, many real estate agents are counting on an $8,000 tax credit for first-time homebuyers as their best hope for boosting flagging sales. That incentive was included in the economic stimulus package passed earlier this year.
"This increase could be the leading edge of first-time buyers responding to very favorable affordability conditions," and the tax credit, Lawrence Yun, the Realtors' chief economist, said in a statement. "We need several months of sustained growth to demonstrate a recovery in housing, which is necessary for the overall economy to turn around."
Pending sales were up 8.5 percent in the South and nearly 4 percent in the West. They fell 5.7 percent in the Northeast and 1 percent in the Midwest.