Pending home sales increased 3.1% to an index reading of 106.9 in February, after a revised 1.2% increase to 103.7 in January, according to a report released Monday by the National Association of Realtors.
The index is at its highest level since June 2013.
The January increase was first reported as 1.7% to 104.2.
Economists polled by Thomson Reuters predicted the index would be up 0.4%
An index of 100 is equal to the average level of contract activity during 2001.
Year-over-year the pending homes sales index increased 12.0% from last February, when the index was 95.4.
Regionally, pending sales were mixed. The Northeast saw a 2.3% drop to 81.7, while sales soared 11.6% in the Midwest to 110.4. In the South, sales fell 1.4% to 120.2, and sales increased 6.6% to 102.1 in the West.
"Pending sales showed solid gains last month, driven by a steadily-improving labor market, mortgage rates hovering around 4 percent and the likelihood of more renters looking to hedge against increasing rents," NAR Chief Economist Lawrence Yun said. "These factors bode well for the prospect of an uptick in sales in coming months. However, the underlying obstacle — especially for first-time buyers — continues to be the depressed level of homes available for sale."
Supply issues, especially a lack of lower priced, move-in ready homes has curbed sales. "The return of first-time buyers this year will depend on how quickly inventory shows up in the market," he said.
