U.S. pending home sales up 6.7% in April

WASHINGTON -- The number of U.S. homebuyers who agreed to buy a previously occupied home took the largest monthly jump in nearly eight years in April, but there are still plenty of danger signs for the U.S. housing market.

Home sales appear likely to head upward this summer, potentially to levels not seen since the stock market collapsed last autumn, but prices are expected to keep falling well into next year. Layoffs, which are causing foreclosures to soar, coupled with rising mortgage rates could dampen any real estate recovery.

The National Association of Realtors said yesterday that its seasonally adjusted index of sales contracts signed in April surged 6.7 percent to 90.3, far exceeding analysts' forecasts. It was the biggest monthly jump since October 2001, when pending sales rose 9.2 percent.

The big boost likely reflects the impact of a new $8,000 tax credit for first-time homebuyers that was included in the economic stimulus bill signed by President Barack Obama in February. Because buyers need to complete their purchases by Nov. 30 to claim the credit, "we expect greater activity in the months ahead," Lawrence Yun, the Realtors' chief economist, said in a statement.

Mortgage rates are rising, making homes less affordable for many borrowers. The average rate for a 30-year, fixed-rate mortgage is around 5.3 percent this week, compared with about 5 percent last week, according to Bankrate.com.