NAR’s Pending Home Sales Index rose 8.2 percent month-to-month and 13.4 percent year-over-year in May, to 88.8. An index score of 100 is the average level of contract activity in 2001, the first year that index data was collected. May saw the first year-over-year index increase since April 2010, NAR said.
The index, which tracks homes under contract, is a leading indicator, and the latest data suggest home sales will jump in June and July.
"Absorption of inventory is the key to price improvement," said Lawrence Yun, NAR’s chief economist.
He cautioned, however, that "the job market has sputtered recently, and because variations in local job creation impact housing demand, markets will recover unevenly around the country."
Pending sales jumped in all regions last month. The Midwest saw the biggest year-over-year increase, 17.2 percent, and the second-biggest month-to-month increase, 10.5 percent, to 82.8.
In the South, the index rose 14.6 percent year-over-year and 4.1 percent month-to-month, to 95.
The West saw the biggest month-to-month increase, 12.9 percent, and a 13.5 percent year-over-year increase, to 100.6.
The Northeast was the only region that did not experience double-digit increases. Pending sales in the region rose 4.4 percent year-over-year and 7.3 percent month-to-month, to 69.2.