The rate of pending home sales in the United States rose for the second consecutive month in September, according to the National Association of Realtors.

The Pending Home Sales Index for the month stood at 108.7, up 1.5 percent from August. It also marked a year-over-year increase of 3.9 percent.

A pending sale is defined as a transaction where a contract has been signed but the sale has not yet been finalized. This action typically takes place within a couple of months, making pending sales a helpful forward-looking indicator of home sales. An index of 100 is equal to the level of contract activity in 2001, when home sales fell within the range of 5 million to 5.5 million – a sales rate considered normal for the current U.S. population.

Lawrence Yun, chief economist at the National Association of Realtors, credited low mortgage rates for the increase in pending sales. According to Freddie Mac, the average rate for a 30-year fixed rate mortgage in September stayed in a range between 3.49 percent and 3.73 percent – relatively unchanged from August and roughly a point lower than average rates in September 2018.

"Even though home prices are rising faster than income, national buying power has increased by 6 percent because of better interest rates," said Yun. "Furthermore, we've seen increased foot traffic as more buyers are evidently eager searching to become homeowners."

Yun said he expects home purchase activity would be more pronounced if more housing inventory was available. He said that since mortgage rates are unlikely to decline much lower than their current levels, the construction of more residences and the reduction of the median home price will be greater factors in improving the affordability of homeownership.

"In addition to boosting traditional home building, we should explore a greater utilization of modular factory constructed homes, converting old shopping malls or vacant office space into condominiums, permitting more accessory dwelling units, and other supply-increasing actions in order to meet the rising demand for new housing," said Yun.

The Northeast had the smallest change in its Pending Home Sales Index, which fell 0.4 percent from the previous month to 93.9; this was still 1.3 percent higher than the previous year. The West also had a monthly decrease, with its index dropping 1.3 percent to 95.1 but climbing 3.4 percent from the previous year.

In the Midwest, the index increased 3.1 percent from August and 2.7 percent from September 2018 to 104.4. The index climbed 2.6 percent from the previous month and 5.7 percent from the previous year to 127.5 in the South.