Pending Home Sales Jump Higher, Boosting Stocks

Stocks are higher today as investors take solace in the positive Pending Home Sales data, which showed a 3.2% increase in March. This was much better flat sales reading economists were expecting. It was also the first time we've seen two months of gains in nearly a year.

The pending home number was yet another data point suggesting that housing could be bottoming. Investors feel that if house prices stabilize, this would help a lot of other problems including the big one with the banks. Because many of the troubled assets on the bank's balance sheets are tied to residential housing, if housing were to stop dropping these assets may not be as toxic as some currently expect.

While the pending home sales number was a positive sign, much of the activity was driven by foreclosure and other distressed sales. With unemployment still rising, there could still be pressure on prices as more inventory becomes available on an already saturated market.

Two regions saw pending home sale gains, the South at 8.5% and the West at 3.9%, while two others saw declines, the Northeast fell 5.7% and the Midwest fell 1%.

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