Pending home sales increased in March for the second consecutive month as the index went up year over year. The National Association of Realtors reported that the Pending Home Sales Index rose 3.2 percent to 84.6 from February, when it was 82. The index stands 1.6percent higher than the same period last year.

The improvement in the index could indicate a positive response to the affordability conditions set by the better mortgage rates and low home prices.

Lawrence Yun, NAR’s chief economist believes that the growth needs to be sustained to demonstrate a recovery in housing to attain over-all economic turnaround and may still take time before the market gains enough momentum. "This increase could be the leading edge of first-time buyers responding to very favorable affordability conditions and an $8,000 tax credit, which increases buying power even more in areas where special programs allow buyers to use it as a down payment," said Yun.

The index is highly accepted and used as a forward indicator of home sales trends; monitoring contracts signed, and not completed sales. The increase in pending sales may denote that buyers are taking advantage of low home prices, low interest rates and tax credit for first time hombuyers.

Yun is looking toward the summer selling season to see the market directions and has not call a bottom yet because the index is still at a relatively low level.

In addition to this, he would like to see the inventory of homes for sale drop to six to seven months of supply. "If inventory goes down - it's at just under 10 months now - to below eight months, that would mean we're on the way to a sustainable recovery," Yun said.

The South experienced the biggest pending home sales jump in March by 8.5 percent. Pending sales are 7.7 percent higher there compared with a year ago.

The Midwest improved in March by 3.9 percent from February and 1.7 percent compared to last year.

Northeast and West sales dropped 5.7 percent and 1 percent compared to February, respectively.