The National Association of Realtors' Pending Home Sales Index moved up for the second consecutive month in June, rising 2.4% to a reading of 90.9 from 88.8 in May. It was up even more year-over-year, with a 19.8% gain from the 75.9 reading in June 2010, the low point immediately following expiration of the home buyer tax credit. Analysts were expecting a decline of 2%.

The rise in the index, which measured signed contracts for purchases, should translate into increased existing home sales in July and August. An index of 100 is based on contract activity during 2001.

"For the majority of transactions, the lag time between pending contacts to actual closings is one to two months," said NAR Chief Economist Lawrence Yun. "Therefore, the two consecutive months of rising activity should lead to overall improvement in closed sales in upcoming months. Though a higher than normal cancellation rate can hold back final closing figures, it could well be that some past cancellations are nothing more than delayed buying decisions rather than outright cancellations."

There were an unusually high number of cancellations in the Realtors' most recent report on existing home sales.

Regionally, the PHSI in the Northeast dropped 0.4% to 68.9, still 19.4% higher than June 2010. The Midwest lost 3.7% to 79.7, 26.4% above a year earlier. The South rose 4.4% to 99.2, 19.1% higher than June 2010. The West was up 6.4% to 107.0, 16.4% above a year ago.

The Realtor group expected existing-home sales this year will total 5.0 million, up slightly from last year. They also predict little change in aggregate home prices based on several indicators, including NAR¹s median prices, showing recent signs of stabilization.

Yun had a message for Washington: "The best way to ensure a more solid recovery in housing is to simply return to normal, sound credit standards so more creditworthy home buyers can get a mortgage," he said. "Washington also should not rock the boat with policy changes that would negatively impact affordable credit or otherwise increase the cost of buying or owning a home."