Home sales soar in April

Pending sales of existing homes increased 6 percent in April, as more buyers than expected bought homes in advance of the up to $8,000 tax credit that expired April 30, according to an index released Wednesday by the National Association of Realtors (NAR). 

The tax credit attracted nearly 1 million additional buyers into the market, preserving $900 billion in home equity. That equity is boosting the trade-up market, improving inventories and helping homeowners avoid going underwater on their mortgages or risking foreclosure, NAR chief economist Lawrence Yun said in a release.

While anxiety continues to swirl around the housing market, the report on Wednesday is another positive indicator that the market may finally be regaining its footing. That makes the report welcome news for the Obama administration and Democrats heading into this fall's elections.

Pending home sales are at their highest level since last October, when the index hit 112.4 and buyers were scrambling to beat the first deadline for the tax credit. The data reflect contracts, not closings, which usually take an extra one to two months to complete. To qualify for the tax credit, closings must be completed by June 30. 

"The housing market has to get back on its own feet and now appears to be in a good position to return to sustainable levels even without government stimulus, provided the economy continues to add jobs," Yun said. 

NAR expects a net of 1 million additional jobs in the second half of this year and about 2 million jobs in 2011. 

Year over year, the index was 22.4 percent above its April 2009 level. 

In addition, March numbers were revised up with the index, jumping 7.1 percent to 104.6, up from the 5.3 percent initially reported by NAR. 

"There were concerns that only a small pool of buyers were left to take advantage of the tax credit extension," Yun said. "But evidentially the tax stimulus, combined with improved consumer confidence and low mortgage rates, are contributing to the surging sales."