Pending home sales climbed 3.3 percent in July, with the National Association of Realtors’ (NAR) pending home sales index climbing to 105.9 for the month from 102.5 in June. However, the index is still 2.1 percent below its July 2013 level (108.2).

The index is at its highest level since August 2013 (107.1) and is above 100 – considered an average level of contract activity – for the third consecutive month.

Lawrence Yun, NAR chief economist, says favorable housing conditions are behind July’s higher contract activity.

"Interest rates are lower than they were a year ago, price growth continues to moderate and total housing inventory is at its highest level since August 2012," he said in a statement. "The increase in the number of new and existing homes for sale is creating less competition and is giving prospective buyers more time to review their options before submitting an offer. More importantly, steady job additions to the economy are helping family finances and giving them added confidence to enter the market."

The PHSI in the Northeast jumped 6.2 percent to 89.2 in July, and is 8.3 percent above a year ago. In the Midwest the index marginally fell 0.4 percent to 104.6 in July, and is 6.4 percent below July 2013. 

Yun expects existing-home sales to be down 2.1 percent this year to 4.98 million, compared with 5.09 million sales of existing homes in 2013. The national median existing-home price is projected to grow between 5 and 6 percent this year and 4 and 5 percent next year.