After two months of declines, pending home sales rose more than expected in August, surging 8.1%, according to a report Wednesday from the National Association of Realtors. The rise was well above the anticipated 1% and comes after July saw a 1.8% drop.

Pending home sales are a future indicator of signed contracts in one or two months.

Signings for August are still down 8.3% compared to August 2020.

“Rising inventory and moderating price conditions are bringing buyers back to the market,” said Lawrence Yun, NAR’s chief economist. “Affordability, however, remains challenging as home price gains are roughly three times wage growth.”

According to the Case-Shiller home price index, home prices in July were up nearly 20% nationally on an annual basis. The increase in supply has lowered the number of bidding wars, according to Realtors.

“Pending sales in recent months have run above the level implied by mortgage applications, probably because the proportion of cash buyers has increased,” said Pantheon Macroeconomics in a research note prior to the results. “We have no reason to think that cash buyers disappeared in August, so we look for another overshoot in pending sales.”

Sales rose in the Midwest and South. Yun added that the more moderately priced regions in the South and Midwest are unsurprisingly experiencing more signings, which can be attributed to workers’ ability to work remotely and therefore enable them to live in less expensive homes.

The rebound was a surprise to some who thought the rising prices would deter potential buyers. The median price of all existing homes was $356,700, marking a 14.9% increase since August 2020 as prices increased in all four regions of the country.

Midwest sales rose 10.4% month to month and were down 5.9% from last year. Pending sales in the South increased 8.6% for the month and dropped 6.3% compared to a year ago. Sales in the West rose 7.2% for the month and were down 9.2% from last year. In the Northeast, pending sales rose 4.6% for the month and were down 15.8% compared to August 2020.

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