Pending home sales in the USA increased by 1.8% in May from the prior month and 1.1% year-over-year, according to the National Association of Realtors (NAR).

All four USA regions experienced month-over-month increases, most notably the West with a 6% rise. Year-over-year, contract signings rose in the Midwest (2.6%) and the South (2%), while they fell in the Northeast (0.5%) and West (1.2%).

Lawrence Yun, said NAR Chief Economist, said: "Consistent job gains and rising wages are modestly helping the housing market. Hourly wages are increasing faster than home prices. However, mortgage rate fluctuations are the primary driver of homebuying decisions and impact housing affordability more than wage gains."

"The Northeast's housing shortage is boosting home prices, with more than a quarter of homes selling above list price. Conversely, more inventory in the South gives home buyers greater negotiation power. Price declines in the South should be considered temporary given the region's strong job creation."