In yet another sign of stabilization within the U.S. housing market, pending home sales continued the climb upward in March, the National Association of Realtors (NAR) reported Tuesday.

NAR’s Pending Homes Sales Index (PHSI), a forward-looking indicator based on contracts signed in March, rose 5.3 percent from February and was 21.1 percent above March of last year. This increase follows an 8.3 percent jump in February and affirms that a surge of home sales is unfolding for the spring home buying season, NAR said.

The month-to-month jump in pending sales surpassed analysts’ predictions. According to a Reuters poll, analysts were expecting pending home sales to inch up just 4 percent in March.

On a seasonally-adjusted basis, pending home sales have now increased for two consecutive months. And on an unadjusted basis, March marked the third straight month of growth.

The PHSI in March varied from region to region. The index in the South surged 12.7 percent from February and was 28.3 percent above March of 2009. In the West, the PHSI increased 1.9 percent from the month prior and was 8.8 percent higher than a year earlier. The index in the Midwest nudged up 1.2 percent from February and was 18.5 percent above March of last year.

The only region to post a month-to-month decline was the Northeast, where pending home sales fell 3.3 percent. However, the PHSI in the Northeast remained 27.2 percent higher than a year ago.

Lawrence Yun, NAR chief economist, said the combination of favorable affordability conditions and the homebuyer tax credit bolstered pending home sales in March. But now that the tax credit has expired, Yun believes sales will decline in the months to come.

“Clearly the home buyer tax credit has helped stabilize the market. In the months immediately following the expiration of the tax credit, we expect measurably lower sales,” he said. “Later in the second half of the year, and into 2011, home sales will likely become self-sustaining if the economy can add jobs at a respectable pace, and from a return of buyer demand as they see home values stabilizing.”

Yun said another encouraging sign is the improvement in the availability of jumbo and second-home mortgages. He said as bank balance sheets strengthen, it is just a matter of time before lending of non-government-backed mortgages steadily opens up.

The National Association of Realtors (NAR) reported Monday that sales of previously owned homes rose 7.6 percent in April compared to March, reflecting a surge in activity as buyers sought to close deals ahead of the contract deadline of April 30th for the federal homebuyer tax credit.

Last month’s numbers pushed the annual sales rate to 5.77 million units, up from a 5.36 million sales rate in March. The newly released data far exceeded analysts’ expectations. They were projecting an increase, but somewhere between a 5.60 and 5.65 million-unit sales pace. Last year at this time, the sales rate was on track to hit just 4.70 million pre-owned units for the year.

Although, the increase in existing home sales was widely anticipated and a welcome boost to a real estate market still trying to gain some meaningful traction, some warn that the gains recorded over the last couple of months (monthly sales rose 7.0 percent in March), will soon be retracted. With the tax credit, many homebuyers planning to make purchases during the summer season were likely prompted to move those decisions up. But Lawrence Yun, NAR’s chief economist, remains optimistic that a turnaround has taken hold.

“The upswing in April existing-home sales was expected because of the tax credit inducement, and no doubt there will be some temporary fallback in the months immediately after it expires, but other factors also are supporting the market,” Yun said. “For people who were on the sidelines, there’s been a return of buyer confidence with stabilizing home prices, an improving economy, and mortgage interest rates that remain historically low.”

Eli Tene, a real estate analyst, investor, and president of Panorex Realty in Los Angeles, has a different take. He says the positive news in home sales won’t last.

“I think we are due for another round of foreclosures. Interest rates will rise, and the perfect storm is forming that will lead to a possible spike in interest rates. When this happens, homes sales will have to suffer another negative impact,” Tene explained.

He added, “The housing market is witnessing movement in homes $500,000 or less, but home sales in the higher end are soft. Mortgage financing and approvals continue to challenge borrowers in all markets, despite low interest rates and prove to be a serious challenge and barrier to closing transactions in high-end markets.”

But at least for the short-term, NAR President Vicki Cox Golder, owner of Vicki L. Cox & Associates in Tucson, Arizona, says that while purchasing traffic may be somewhat mixed, many buyers are staying in the market, even without the tax credit.

“Some Realtors tell us they are very busy with clients who are entering the market now as a result of improved conditions, while others are welcoming a slowdown from frantic market conditions in recent months,” Golder said.

Despite the increase in monthly sales figures, NAR says total housing inventory at the end of April rose 11.5 percent to 4.04 million existing homes available for sale, which represents an 8.4-month supply at the current sales pace. That’s up from an 8.1-month backlog in March.

Raw unsold inventory is 2.7 percent above a year ago, but remains 11.6 percent below the record of 4.58 million homes in July 2008, NAR noted.

“Although inventory levels remain above normal and much of the gain last month was seasonal, the housing price correction appears essentially over,” Yun said. “In fact, a majority of the markets have seen price gains recently. A return to old-fashioned responsible lending and buying will help the housing market avoid disruptive and painful bubble-bust cycles.”

NAR reported that the national median existing-home price for all housing types was $173,100 in April, up 4.0 percent from April 2009. Distressed homes accounted for 33 percent of sales last month, compared with 35 percent in March, the trade group found

The number of homeowners deciding to throw in the towel even though they can afford to pay their mortgage is growing, according to two new industry studies. Still-falling property values are pushing more homeownersunderwater, and the social stigma attached to foreclosure is steadily eroding as delinquencies become almost commonplace – such factors are giving rise to so-called strategic defaults.

Researchers at the University of Chicago and Northwestern University found that the number of homeowners willing to default when the value of a mortgage exceeds the value of their house, even if they can afford to pay their mortgage, has dramatically increased compared to just a year ago. The percentage of foreclosures that were perceived to be strategic was 31 percent in March 2010, compared to 22 percent in March 2009.

According to their study, one likely reason for this growing trend is the increasing perception that lenders are not going after borrowers who walk away. In March 2010, homeowners surveyed said there was just a 54 percent chance that a lender would pursue them if they default on their mortgage.

The results also indicate that the likelihood of strategic default increases by 23 percent when homeowners learn

that their neighbor with negative equity has received a partial loan for forgiveness. Additionally, strategic default increases by 29 percent if homeowners are able to find an alternate way to finance a new home.

“A key deterrent to strategic default is the fear of losing a good credit score,” said Luigi Zingales, a professor at the University of Chicago’s Booth School of Business, who conducted the study along with Paola Sapienza, a finance professor at Northwestern’s Kellogg School of Management.

“Approximately 74 percent of homeowners in our survey believe it is very important to maintain good credit and this can be a factor in encouraging them not to walk away,” Zingales said.

A separate report from Morgan Stanley showed a similar elevation in the number of defaults made strategically, although the investment bank’s assessment is quite a bit lower than the one put forth by the academia researchers.

Morgan Stanley’s study says that about 12 percent of all mortgage defaults in February involved homeowners who could still afford to make payments but opted to renege on their mortgage contract anyway. The figure is up from the firm’s estimate of 4 percent who strategically defaulted in mid-2007.

According to Morgan Stanley’s analysis, the homeowners most likely to walk away are those with high credit scores and outstanding mortgage balances far above the current market value of their homes.

The magnitude of strategic defaults is reflected in the Obama administration’s new set of housing initiatives, one of which provides for principal write-downs when borrowers owe more than 115 percent of their home’s current value.

The analysts at Morgan Stanley wrote that by focusing on principal reductions for borrowers who are severely underwater, the government’s mortgage programs could curb future strategic defaults.