Pending home sales saw a record high increase in May, according to the National Association of Realtors. However, pending sales were still down compared to the previous year.

The group's Pending Home Sales Index for May stood at 99.6, rocketing up 44.3 percent from April. The figure was down 5.1 percent from May 2019.

"This has been a spectacular recovery for contract signings, and goes to show the resiliency of American consumers and their evergreen desire for homeownership," said Lawrence Yun, chief economist at the National Association of Realtors. "This bounce back also speaks to how the housing sector could lead the way for a broader economic recovery."

A pending sale is defined as a transaction where a contract has been signed but the sale has not yet closed, an action which typically takes place within a couple of months. The National Association of Realtors says this makes the Pending Home Sales Index a good forward-looking indicator for home sales in the near future. An index of 100 is equal to sales activity in 2001, when existing home sales fell within the range of 5 million to 5.5 million; this activity is considered normal for the current population of the United States.

Yun said more listings have been entering the market as restrictions due to the COVID-19 pandemic are gradually lifted. However, he said more home construction is still necessary to meet buyer demand.

"The outlook has significantly improved, as new home sales are expected to be higher this year than last, and annual existing-home sales are now projected to be down by less than 10 percent – even after missing the spring buying season due to the pandemic lockdown," Yun said.

The National Association of Realtors adjusted its home sales projections to an anticipated 4.93 million existing home sales and 690,000 new home sales. Yun said existing home sales are forecast to reach 5.35 million in 2021, while new home sales are expected to hit 800,000.

In the Northeast, the Pending Home Sales Index rose 44.4 percent to 61.5. However, this figure was still down 33.2 percent on an annual basis.

The South was the only region where pending sales were up from the previous year. The region's index stood at 125.5, up 43.3 percent from the previous month and 1.9 percent from the previous year.

The Pending Home Sales Index in the West increased 56.2 percent to 89.2, though this was down 2.5 percent from May 2019. The Midwest saw a 37.2 percent boost to its index, which reached 98.8 – down 1.4 percent from May 2019.