July was a busy month for pending home sales

Yun said he had expected to see more first-time buyers return to the housing market this summer and was surprised by their poor showing. The median projection in a Bloomberg survey of economists called for the index to rise 1 percent. A lag of a month or two usually exists between a contract and a completed sale.

The index from the National Association of Realtors (NAR) climbed 0.5% month-on-month in July, reversing the previous month’s decline and climbing 7.3% year-on-year.

The index rose 7.4% in July from a year earlier, the 11th consecutive annual increase.

“Contract activity in most of the country held steady last month, which bodes well for existing-sales to maintain their recent elevated pace to close out the summer”, said Lawrence Yun, chief economist for the NAR in a release.

“In light of the recent volatility in the stock market, it’s possible some prospective buyers may err on the side of caution and delay decisions, while others may view real estate as a more stable asset in the current environment”, said Yun. July’s pending sales were the third highest this year.

Pending sales rose in two of four regions, increasing 4 percent in the Northeast and 0.6 percent in the South. Purchase contracts fell 1.4 percent in the West and were little changed in the Midwest. It has, however, also added uncertainty for some home buyers. Builder sentiment is the highest it has been in a decade.

Housing is gaining steam, driven by a tightening labor market.

The average interest rate for a 30-year fixed-rate mortgage was 4.05% in July, according to Freddie Mac, the highest it has been since November 2014. But the market has also revealed a mismatch between rising demand and limited supplies of homes on the market.