More evidence that the housing market is rising off a bottom came Tuesday from the National Association of Realtors, which reported a 3.2% increase in its July Pending Home Sales Index, a forward-looking indicator based on contracts signed for the purchase of existing homes. It was the sixth straight month the index has registered gains.

The PHSI stood at 97.6 in July, up from a reading of 94.6 in June, and is 12% percent higher than July 2008. The index is at the highest level since June 2007 when it was 100.7.

Regionally, the PHSI in the Northeast declined 3% to 78.8 in July, 4.7% higher than July 2008. In the Midwest the index slipped 2% to 88.1 but is 8.1% above a year ago. In the South, the index climbed 3.1% to 103.8, 12% above July 2008. The West jumped 12.1% to 112.5, 20% above a year ago.

"The recovery is broad-based across many parts of the country,"said Lawrence Yun, chief economist for the Realtor group.

Much of the activity, however, was driven by first-time buyers. NAR estimates that about 1.8 to 2 million first-time buyers will take advantage of the federal $8,000 tax credit this year, with approximately 350,000 additional sales that would not have taken place without the credit.

NAR president Charles McMillan, a broker with Coldwell Banker in Dallas-Ft.Worth, cautioned that the end of the tax-credit program in November could stall the current momentum. "Even with a good recovery taking place, the market is not yet back to normal," he said. "To ensure that housing has a broad stimulus to the overall economy and stays on sound footing, we¹re encouraging Congress to extend the tax credit into 2010, and to expand it to all buyers of primary residences."

Yun agreed. "Unless the tax credit is extended, no one should be surprised to see home sales drop in the first quarter of next year,² he said.³However, the fundamentals of the housing market and the economy are trending up, and we expect home sales to generally pick up in the second quarter of 2010."

Meantime, the NAR's Housing Affordability index stood at 158.5 in July, below the peak set in April but 36 percentage points higher than a year ago.The HAI measures the relationship between home prices, mortgage interest rates and family income.