Pending home sales in U.S. increase by most in nearly a year

U.S. pending home sales unexpectedly rose in May by the most in nearly a year as low borrowing costs paired with increased listings bolstered demand.

The National Association of Realtors’ index of pending home sales increased 8% from April to a four-month high of 114.7, according to data released Wednesday. The median estimate in a Bloomberg survey of economists called for a 1% decline.

The pickup in contract signings signals demand for homes remains strong despite record-high prices. Further, the reopening of the economy and the approaching end of the moratorium on foreclosures have the potential of boosting the supply of available homes later this year.

“The housing market is attracting buyers due to the decline in mortgage rates, which fell below 3%, and from an uptick in listings,” Lawrence Yun, chief economist at the NAR, said in a statement. He added that buyer interest remains robust, helped by recent stock market gains.

Pending home sales increased across all U.S. regions last month, with the Northeast and West posting the largest gains.

Compared with a year earlier, contract signings were up almost 14% on an unadjusted basis.

A separate report last week showed that sales of previously owned U.S. homes fell for a fourth straight month in May as higher home prices and lean inventories weighed on home buying.