Home sales in U.S. up 6.8 percent in March

WASHINGTON - Home sales rose more than expected 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 nationally 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 likely to keep growing through the first half of the year as tax credits for first-time buyers and low mortgage rates fuel purchases. The average interest rate this week was 5.07 percent for a traditional 30-year fixed-rate mortgage, Freddie Mac said Thursday.

But doubts remain about whether the momentum will be sustained in the second half of the year when federal support is gone. "This is a temporary surge that won't be sustained," said Paul Dales, an economist with Capital Economics. "It won't be very pretty."

Sales are now up 18 percent from their low in early 2009, but 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. The true test will be whether the market can stand on its own after federal tax credits expire April 30. - AP