WASHINGTON (AFP) - The massive US services sector registered stronger than expected growth in March, amid signs of a continued economic recovery, a private survey showed on Monday. Buoyed by robust increase in orders at home and abroad, the Institute of Supply Management said its non-manufacturing index posted its third consecutive month of growth. The so-called purchasing managers index registered 55.4 percent, surging past the consensus forecast of 54 percent. Any PMI number above 50 percent indicates growth in the sector that accounts for more than two-thirds of US economic activity. According to analyst Aaron Smith of Moodys Economy.com, the sector, which has lagged behind other parts of the economy, may be now be catching up. The increase in March suggests that growth is broadening from the goods sector, he said. The services index now stands at its highest level in nearly three years. New orders surged by 7.3 points to 62.3 percent, pointing to a strong increase in demand. But the positive trend was weighed down by a continued contraction of employment. While employment activity improved, it still stood in negative territory for the 27th consecutive month, at 49.8pc. This is a very encouraging report, which indicates acceleration in demand growth from both domestic and foreign customers, said Barclays Capital analyst Nicholas Tenev. Meanwhile, pending home sales in the United States surged 8.2 percent in February, suggesting the troubled housing market could get another boost from a temporary tax credit, an industry group said Monday. The National Association of Realtors (NAR) said its pending home-sales index rose to 97.6 from a downwardly revised 90.2 reading in January. Pending home sales rose in February, potentially signaling a second surge of home sales in response to the home-buyer tax credit, the NAR said in a statement. The forward-looking indicator reflects contracts signed to purchase homes but not the finalization of them, which typically occur with a lag time of up to two months. On an annual basis, pending home sales were 17.3 percent higher than in February 2009, when the index stood at 83.2. Yun said there were signs of a rise of activity in recent weeks with ongoing reports of multiple offers in more markets, which suggests the March data could demonstrate additional improvement from buyers responding to the tax credit. The US government program aimed at reviving the moribund housing sector is offering tax credits to first-time home buyers and to certain repeat home buyers that expire on April 30. The strong rise in February, when home sales slumped amid severe winter storms, took most analysts by surprise. The consensus forecast was for the index to remain unchanged following a revised decline of 7.6 percent in January. The rise in buyer contact activity may signal the early stages of a second surge of home sales this spring, said Lawrence Yun, NAR chief economist. The healthy gain hints home prices are continuing to flatten, he said. We need a second surge to meaningfully draw down inventory and definitively stabilize home values. The rise in pending home sales in February supports our view that existing-home sales will rebound over the spring, before the homebuyer tax credit expires for closed contracts in June, Peter Newland at Barclays Capital said. Under the federal stimulus program, a home purchase completed by June 30 will qualify when a binding sales contract is signed by April 30.