Pending home sales increased for the fourth consecutive month in August, according to the National Association of Realtors.

“Tremendously low mortgage rates – below 3% – have again helped pending home sales climb in August,” said NAR Chief Economist Lawrence Yun. “Additionally, the Fed intends to hold short-term fed funds rates near 0% for the foreseeable future, which should in the absence of inflationary pressure keep mortgage rates low, and that will undoubtedly aid homebuyers continuing to enter the marketplace.”

NAR’s Pending Home Sales Index (PHSI) shot up 8.8% to 132.8 in August, topping the previous record high of 122.1 in July. Contract signings rose 24.2% year over year.

“While I did very much expect the housing sector to be stable during the pandemic-induced economic shutdowns, I am pleasantly surprised to see the industry bounce back so strongly and so quickly,” Yun said.

While pending contracts are at an all-time high, Yun said that it will not necessarily lead to a surge in home sales because not all contracts result in closings and due to sampling size variations. Yun also said that pending home sales are exceeding pre-pandemic levels but without matching supply – meaning the recovery will not be sustainable.

“Home prices are heating up fast,” he said. “The low mortgage rates are allowing buyers to secure cheaper mortgages, but many may find it harder to make the required down payment.”

Each of the four major regions posted growth in month-over-month and year-over-year pending home sales transactions.

The Northeast PHSI was up 4.3% to 117.1 in August, a 26% jump from a year ago. In the Midwest, the index climbed 8.6% to 124.5 last month, 25% higher than in August 2019.

Pending home sales in the South increased 8.6% to 154.2, up 23.6% year over year. The index in the West rose 13.1% in August to 120.3, up 23.6% from the year before.