The rate of pending residential transactions in the United States in July was at its second highest point of 2016 as well as the second highest level in more than a decade, according to the National Association of Realtors.

The organization found that the Pending Home Sales Index rose to 111.3 during the month. This figure was up 1.3 percent from a downwardly revised figure of 109.9 in June and 1.4 percent above the July 2015 figure of 109.8. It was second only to a figure of 115 recorded in April.

The Pending Home Sales Index is a measure of existing home sales where a contract has been signed but the transaction has not been closed – an action which usually takes place within two months. The measure represents about 20 percent of existing home sales and can be used as an indicator of expected housing activity in the next two months. A Pending Home Sales Index of 100 is equal to the level of contract activity during 2001, which coincidentally fell within the normal range of 5 million to 5.5 million existing home sales.

Lawrence Yun, chief economist at the National Association of Realtors, credited the increasing in pending sales to a significant uptick in sales in the West. In this region, the Pending Home Sales Index was up 7.3 percent from June and 6.2 percent from July 2015 to stand at 108.7.

"The index in the West last month was the highest in over three years, largely because of stronger labor market conditions," said Yun. "If homebuilding increases in the region to tame price growth and alleviate the ongoing affordability concerns, the healthy rate of job gains should support more sales."

Yun said Realtors in several areas with high home prices have raised concerns about affordability, particularly the need for starter homes and townhouses that are more likely to be within the price range of first-time buyers. Recent residential construction data indicates that the size and price of new homes have gone down in the past year, a sign that new construction is moving toward more affordable properties.

Even with low mortgage rates, however, Yun said the homeownership rate won't make significant gains unless affordable properties become more common. According to the U.S. Census Bureau, the current homeownership rate of 62.9 percent is at its lowest point since 1965.

"Amidst tight inventory conditions that have lingered the entire summer, contract activity last month was able to pick up at least modestly in a majority of areas," Yun said. "More home shoppers having success is good news for the housing market heading into fall, but buyers still have few choices and little time before deciding to make an offer on a home available for sale. There's little doubt there'd be more sales activity right now if there were more affordable listings on the market."

The Pending Home Sales Index for the Northeast region increased to 96.8 in July, up 0.8 percent from the previous month and 1.1 percent from the previous year. The South had the highest figure at 123.9, an increase of 0.8 percent from June and 0.4 percent from July 2015.

The Midwest was the only region where the Pending Home Sales Index went down. Its figure of 105.8 was a drop of 2.9 percent from the previous month and 1.1 percent from the previous year.

The National Association of Realtors expects the number of existing home sales in the United States to reach 5.38 million this year. This total would be a 2.8 percent increase from 2015 and the highest total since 2006, which logged 6.48 million existing home sales.

Existing home prices experienced median growth of 6.8 percent in 2015. This year, the National Association of Realtors expects that price growth will moderate to approximately 4 percent.