Pending home sales rose in April for the fourth straight month and reached their highest level in nine years, according to the National Association of Realtors. Led by the Northeast and Midwest, all four major regions saw increases in April.

The Pending Home Sales Index, a forward-looking indicator based on contract signings, increased 3 percent to 112.4 in April from a slight upward revision of 108.7 in March and now is 14 percent above April 2014, which came in at 98.6. The surge in April was the largest annual increase since September 2012. 

The index now has increased year-over-year for eight consecutive months and is at its highest level since May 2006, when it hit 112.5.

Lawrence Yun, NAR chief economist, says the steady gains in contract activity each month this year highlight the fact that buyer demand is strong. 

“Realtors are saying foot traffic remains elevated this spring despite limited—and in some cases severe—inventory shortages in many metro areas,” he said. “Homeowners looking to sell this spring appear to be in the driver’s seat, as there are more buyers competing for a limited number of homes available for sale.”

Adds Yun, “As a result, home prices are up and accelerating in many markets.”

Following April’s decline in existing-home sales, Yun expects a rebound heading into the summer, but the likelihood of meaningful gains will depend on a much-needed boost in inventory and evidence of moderating price growth now that interest rates have started to rise.

“The housing market can handle interest rates well above 4 percent as long as inventory improves to slow price growth and underwriting standards ease to normal levels so that qualified buyers—especially first-time buyers—are able to obtain a mortgage.”

After falling four straight months, the index in the Northeast bounced back solidly (10 percent) to 88.3 in April, and now is 9 percent above a year ago. In the Midwest the index increased 5 percent to 113.0 in April, and is 13 percent above April 2014.

Pending home sales in the South rose 2 percent to an index of 129.4 in April and are nearly 15 percent above last April. The index in the West inched up 0.1 percent in April to 103.8, and is 16 percent above a year ago.

Total existing-home sales this year are forecast to be around 5.24 million, an increase of 6.1 percent from last year. The national median existing-home price for all of this year is expected to increase around 6.7 percent. In 2014, existing-home sales declined 2.9 percent, and prices rose 5.7 percent.

The Pending Home Sales Index is a leading indicator for the housing sector, based on pending sales of existing homes. A sale is listed as pending when the contract has been signed but the transaction hasn’t closed, though the sale usually is finalized within one or two months of signing.

The index is based on a large national sample, typically representing about 20 percent of transactions for existing-home sales. In developing the model for the index, it was demonstrated that the level of monthly sales-contract activity parallels the level of closed existing-home sales in the following two months.

An index of 100 is equal to the average level of contract activity during 2001, which was the first year to be examined. By coincidence, the volume of existing-home sales in 2001 fell within the range of 5.0 to 5.5 million, which is considered normal for the current U.S. population.

Existing-home sales for May will be reported June 23, and the next Pending Home Sales Index will be June 29.

The National Association of Realtors, with the slug line “The Voice for Real Estate,” bills itself as America’s largest trade association, representing 1 million members involved in all aspects of the residential and commercial real estate industries.