The National Association of Realtors' Pending Home Sales Index continued its upward swing in August with an increase of 6.4% to 103.8, 12.4% ahead of the same month last year.

The PHSI, a forward looking indicator based on signed sales contracts, in August was at its highly level since March 2007's 104.5. The baseline index of 100 was set based on average contract activity for 2001.

The NAR's chief economist, Lawrence Yun, said the magnitude of the increase was likely due to the first-time home buyer tax credit. not all contracts are turning into closed sales within an expected timeframe. "No doubt many first-time buyers are rushing to beat the deadline for the $8,000 tax credit, which expires at the end of next month," he said in a statement.

Yun cautioned, however, that "the rise in pending home sales shows buyers are returning to the market and signing contracts, but deals are not necessarily closing because of long delays related to short sales, and issues regarding complex new appraisal rules."

The PHSI in the Northeast was up 8.2% to 85.3, 12.0% ahead of August 2008.The Midwest rose 3.1% to 90.8, 7.6% above a year ago. The South increased 0.8% to 104.6, 8.2% above August 2008. The West was up 16% to 130.5, 22.3% ahead of the same month last year.

Whether the contracts turn into actual sales is subject to some question."There is likely to be some double counting over a span of several months because some buyers whose contracts were cancelled have found another home and signed a new contract to buy," Yun explained. "Perhaps the real question is how many transactions are being delayed in the pipeline, and how many are being cancelled? Without historic precedents, it's challenging to assess."

Yun again called on Congress to extend and expand the home-buyer tax credt."All we can say for certain is sales will decline when the tax credit expires because we are not yet on a self-sustaining recovery pat," he said, adding that allowing the current credit to expire "raises a risk of a double-dip recession."