NAR notes that it was the fourth straight month the PHSI, which is based on contracts signed for home purchases, had increased compared to the previous month and it has risen year-over-year for eight consecutive months.  In April it was at its highest level since May 2006 when it stood at 112.5.

Lawrence Yun, NAR chief economist, says the steady gains in contract activity each month this year highlight the fact that buyer demand is strong. “Realtors® are saying foot traffic remains elevated this spring despite limited – and in some cases severe – inventory shortages in many metro areas,” he said. “Homeowners looking to sell this spring appear to be in the driver’s seat, as there are more buyers competing for a limited number of homes available for sale.”

Adds Yun, “As a result, home prices are up and accelerating in many markets.”

Sales of existing homes fell in April but Yun says he expects a rebound heading into the summer.  The likelihood of meaningful gains however will depend on an increase in inventory and evidence of moderating price growth to offset rising interest rates.   “The housing market can handle interest rates well above 4 percent as long as inventory improves to slow price growth and underwriting standards ease to normal levels so that qualified buyers – especially first-time buyers – are able to obtain a mortgage.”

The PHSI was up in all four regions with the Northeast and Midwest especially strong.  The Northeastbounced back after four straight months of decline with a 10.1 percent gain in April to 88.3, 9.4 percent higher than in April 2014.

In the Midwest the index increased 5.0 percent to 113.0 in April, and is 13.3 percent above the previous year.  Pending home sales in the South rose 2.3 percent to 129.4 and are up 14.8 percent year-over-year.  The index in the West inched up 0.1 percent in April to 103.8, and is 16.4 percent above a year ago.

Total existing-home sales in 2015 are forecast to be around 5.24 million, an increase of 6.1 percent from 2014. The national median existing-home price for all of this year is expected to increase around 6.7 percent. In 2014, existing-home sales declined 2.9 percent and prices rose 5.7 percent.

The Pending Home Sales Index is a leading indicator based on pending sales of existing homes. A sale is listed as pending when the contract has been signed but the transaction has not closed, though the sale usually is finalized within one or two months of signing.  An index of 100 is equal to the average level of contract activity during 2001, which was the first year to be examined.