Pending sales of homes in the United States rebounded in May after a 1.5 percent drop in April, according to the National Association of Realtors. However, pending transactions were once again below last year's levels.

The Pending Home Sales Index stood at 105.4, up 1.1 percent from April. This figure was 0.7 percent below the May 2018 figure, the 17th consecutive month of annual decreases.

The index measures transactions where a contract has been signed but the sale has not yet closed. Since this step typically takes place within one or two months, pending sales are seen as a good indicator of home sales in the near future. A figure of 100 indicates activity equal to the year 2001, which had a range of 5 million to 5.5 million – an annual rate considered normal for the current U.S. population.

Lawrence Yun, chief economist at the National Association of Realtors, said he believes consumers are more confident about current economic conditions. He said recent decreases to the typical mortgage rate have also encouraged potential buyers to commit to a purchase to lock in a favorable rate.

"The Federal Reserve may cut interest rates one more time this year, but there is no guarantee mortgage rates will fall from these already historically low points," said Yun. "Job creation and a rise in inventory will nonetheless drive more buyers to enter the market."

While the number of existing homes for sale has been steadily increasing following several years of constriction, Yun said many new listings are out of buyers' price range. He said an increase in more affordable listings could help stimulate sales.

"Home builders have not ramped up construction to the extent that it is needed," he said. "Homes are selling swiftly, and more construction will help keep home prices manageable and thereby allow more middle-class families to attain ownership opportunities."

The Midwest had the strongest monthly gain in sales, with its index climbing 3.6 percent to 100.3; however, this was still 1.2 percent lower than a year ago. The Northeast was close behind, with a 3.5 percent increase from May to 92; this was down 0.5 percent from May 2018.

The South was the only region with both monthly and annual gains, with its index of 124.1 marking a 0.1 percent increase from April and a 0.7 percent increase from May 2018. In the West, the index fell 1.8 percent to 91.8 – a year-over-year drop of 3.1 percent.