What may be a reprieve from the onslaught of bad news from the subprime market, resales of existing homes beat market expectations by a long shot causing the markets to soar in early trading. Fears that the subprime meltdown were spreading to the whole of the housing market had put severe pressure on the market the past few weeks.

The National Association of Realtors’ index for pending sales of existing homes increased at a seasonally adjusted annual rate of 0.7 percent to 109.3 in February from a reading of 108.5 in January. The index was 8.5 percent below its level of a year earlier, but stronger than the market had been expecting.

The data reassured investors that the housing sector, while weak, is not being pummeled by the struggling subprime mortgage sector. Fears that mortgage problems will spill over into the rest of the economy have been a big factor behind the market’s volatility of the past several weeks, and the uptick in sales came as a pleasant surprise.

“That says people are getting mortgages, people are buying houses, people have incomes, jobs, all that good stuff,” said Kim Caughey, equity research analyst at Fort Pitt Capital Group. “You’d never go out and buy a house if you think you’re going to get laid off. Consumers are optimistic about the future, and as we all know, the consumer drives this economy. via Yahoo! Finance

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