The pending sales of existing homes were proceeding at a stronger pace than the previous year in June, breaking a 17-month period where these transactions have slowed on an annual basis.

According to the latest monthly report from the National Association of Realtors, the Pending Home Sales Index stood at 108.3 in June. This was a 2.8 percent boost from May and a year-over-year increase of 1.6 percent.

The index is a measure of transactions where a contract has been signed for a home sale, but the transaction has not yet closed. This action typically takes place within a couple of months, making the figure a useful forward-looking indicator of sales activity. An index of 100 is equal to existing sales activity in 2001, when existing home sales fell between a range of 5 million and 5.5 million – a rate considered normal for the current U.S. population.

"Job growth is doing well, the stock market is near an all-time high, and home values are consistently increasing," said Lawrence Yun, chief economist at the National Association of Realtors. "When you combine that with the incredibly low mortgage rates, it is not surprising to now see two straight months of increases."

The strongest growth occurred in the West, which had a Pending Home Sales Index of 96.8 – 5.4 percent higher than in May and 2.5 percent above the June 2018 reading. In the Midwest, the index grew 3.3 percent from the previous month and 1.7 percent from the previous year to 103.6.

The Northeast had an index of 94.5, up 2.7 percent from May but just 0.9 percent from June 2018. The index in the South stood at 125.7, up 1.3 percent from the previous month and 1.4 percent from the previous year.

Yun said homeowner equity has grown substantially, doubling over the past six years to reach a current level of nearly $16 trillion. He said indicators also show a strong interest for homes, with the average existing home selling in less than a month and the average newly constructed home selling in less than three months.

Despite a slowly increasing supply of existing homes in recent months, Yun said buyers continue to face affordability challenges. According to the latest existing home sales report from the National Association of Realtors, the median price for a home has been increasing for 88 consecutive months and stood at $285,700 in June.

"The number of potential buyers exceeds the number of homes available," said Yun. "We need to see sizable growth in inventory, particularly of entry level homes, to assure wider access to homeownership."

This is easier said than done, according to the National Association of Home Builders. The NAHB's latest new home sales report shows that the median price for a newly built home in June was $310,400, higher than the typical existing home price but roughly on par with sales prices in June 2018.

"Though there is a clear demand for new homes, builders continue to wrestle with affordability headwinds, including shortages of buildable lots and skilled labor, that are constraining sales," said Greg Ugalde, NAHB chairman.

The NAHB's new home sales report measures transactions where a contract has been signed or a deposit is accepted; the home can be in any stage of construction, including the planning phase. The seasonally adjusted annual rate of new home sales for June was 646,000, a 7 percent increase from June and a 2.2 percent year-over-year increase.