Sales contracts on existing homes were up 5% in June, its biggest jump in more than three years, the National Association of Realtors reported this morning (August 1).

The NAR's Pending Home Sales Index, based on contracts signed in June, stood at 102.4 in June, 5.0% higher from the downwardly revised May index of 97.5 but 8.6% below June 2006's 112.0.

Lawrence Yun, NAR senior economist, said that although the numbers were enouraging, "it is too early to say if home sales have already passed bottom. Still, major declines in home sales are likely to have occurred already and further declines, if any, are likely to be modest given the accumulating pent-up demand."

Regionally, the index was up 8.6% in the West to 103.6, 5.5% below a year ago; up 3.1% in the Northeast to 96.0, 2.4% below last June; up 4.7% in the South to 111.6, down 12.7% year-over-year; and up 3.5% in the Midwest to 92.5, 8.2% lower than June 2006.

The index is a leading indicator for the housing sector, 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.