The Dow Jones home construction index <.DJUSHB> climbed more than 7 percent. Shares of luxury home builder Toll Brothers <TOL.N> gained 5.7 percent to $17.95, while shares of D.R. Horton <DHI.N> surged 19.6 percent to $7.31 after the home builder posted a smaller-than-expected quarterly loss.
News that the Federal Reserve had extended measures to provide liquidity in the commercial paper market also helped.
For more on the Fed and on pending home sales see [ID:nSP268328].
"The pending home sales number wasn't a disaster. At the same time, the Fed extended several of their programs for commercial paper," said Marc Pado, U.S. market strategist at Cantor Fitzgerald & Co in Sand Francisco.
"Both these are little positives. But it's going to be tough to get anything really going before we get to that jobs report on Friday. It's looming like a dark cloud."
The U.S. payrolls report for January is due for release on Friday morning.
Merck & Co <MRK.N> was among the Dow's biggest boosts, up 4.5 percent at $29.70 after its results beat Wall Street's expectations.
The Dow Jones industrial average <.DJI> rose 63.63 points, or 0.80 percent, to 8,000.46. The Standard & Poor's 500 Index <.SPX> added 6.51 points, or 0.79 percent, to 831.95. The Nasdaq Composite Index <.IXIC> was up 8.83 points, or 0.59 percent, at 1,503.26.
Caution remained amid a lack of definitive measures to stabilize the banking sector. Among financials, Bank of America <BAC.N> was down 7.5 percent at $5.55.
On the downside, SanDisk Corp <SNDK.O> was among the Nasdaq's biggest percentage losers, down more than 23 percent at $8.68 after the flash memory card maker warned that revenue for the current quarter would fall short of analysts' expectations.
(Reporting by Leah Schnurr; Additional reporting by Ellis Mnyandu; Editing by James Dalgleish)