Pending home sales at a 3-year high

• Signed contracts to buy homes rose in March to highest level in 3 years
• NAR%27s pending sales index rose to 105.7 from a revised 104.1 in February
• Signed contracts are 7%25 higher than a year ago

WASHINGTON (AP) — The number of signed contracts to buy homes rose in March to the highest level in three years.

The National Association of Realtors says its seasonally adjusted index for pending home sales rose 1.5% to 105.7. That's the highest since April 2010, when a homebuyer's tax credit boosted sales. It's also above February's reading of 104.1.

Signed contracts are 7% higher than a year earlier. There is generally a one- to two-month lag between a signed contract and a completed sale.

Still, sales are being held back by limited supply. Sales of previously occupied homes dipped in March to a seasonally adjusted annual rate of 4.92 million, from 4.95 million in February.

Total existing-home sales are projected to increase 6.5% to 7% over 2012 to nearly 5 million sales this year, the Realtors said, while the median existing-home price is forecast to rise about 7.5%.

An index of 100 equals the average level of contract activity during 2001, when home sales were in the range of 5 million to 5.5 million.

The NAR says the index for the Northeast was unchanged at 82.8 in March, still 6.3% higher than March 2012. In the Midwest the index increased 0.3% to 103.8, 13.7% above a year ago. Pending home sales in the South rose 2.7% to 120.0, up 10.4% from March 2012. In the West the index increased 1.5% to 102.9, but that is 4.3% below a year ago.

Steady job gains and near-record low mortgage rates have helped drive home sales up the past year. Buyer traffic is 25% higher than a year ago. Rising demand and low supply of homes for sale is fueling home construction.

Builders started work on more than 1 million homes at an annual rate in March, first time the pace has topped that threshold in nearly 5 years.

The housing recovery is helping boost economic growth year. Builders are starting work on more homes, creating construction jobs. And home prices are rising. Higher prices tend to make homeowners feel wealthier and encourage spending.

Mortgage rates, meanwhile, remain near record lows. The average rate on the 30-year fixed mortgage fell to 3.4% last week, from 3.41%. That's not far from the record low 3.31% in November

The average rate on a 15-year fixed mortgage fell to 2.61% last week, lowest on records dating to 1991.

Contributing: Ray Goldbacher, USA TODAY