The PHSI remained steady in the Northeast at 92.3 in May, 14.3 percent above 2012's index. In the Midwest, the index climbed 10.2 percent; at 115.5, it is 22.2 percent higher than it was in May 2012. The South saw an increase of 2.8 percent, 12.3 percent above 2012. And in the West, the index climbed 16 percent to 109.7. The West's limited inventory constricted contract signings, however, and May 2013's index is only 1.1 percent above May 2012's.

Is the Mortgage Rate Behind an Increase in Demand?
Though a lack of inventory is still constricting sales activity in some parts of the country, the overall number of pending contracts is on the rise. Recent spikes in mortgage rates could explain the climb. NAR economists believe buyers want to take advantage of the current affordable market conditions before mortgage interest rates climb any higher.

Are High Mortgage Rates Jeopardizing House Affordability?
After a steep climb that took average fixed mortgage rates to their highest levels since mid-2011, the week ending July 3 saw rates settling back down. The 30-year fixed-rate mortgage averaged 4.29 percent, down from the previous week's average of 4.46 percent. The 15-year fixed-rate mortgage, meanwhile, ended the week with an average of 3.39 percent, also down from the previous week's average of 3.50 percent.

Despite the drop, both the 30-year and the 15-year fixed-rate mortgages closed with averages higher than they were in 2012. Yet when compared to historical standards, mortgage rates are still low, putting the dream of home ownership within reach for many home buyers.

A Smaller House for More Money?
But mortgage rates aren't the only numbers climbing. NAR economists recently upgraded their price forecast for 2013. With an increase of more than 10 percent, the national median existing-home price should near $195,000. Not since 2005 has the median price seen such growth.