The NAR's pending home sales index is up 4.8 percent in June to 74.3 after a negligible upward revision to 70.9 in May, although it is down 2.6 percent from a year ago. The June increase exceeds the consensus of up 1.1 percent in the Econoday survey of forecasters. Pending home sales were up across all regions. It seems that a combination of increased supply in the existing home market and a dip in mortgage interest rates helped bring some buyers into the market.

NAR Chief Economist Lawrence Yun said,"The rise in housing inventory is beginning to lead to more contract signings. Multiple offers are less intense, and buyers are in a more favorable position."

Of course, these are contracts taken out in June with mortgages secured in May and June, not closed sales. However, those buyers who have pre-qualified for mortgages below 7 percent and found a suitable property are likely to complete their sales. Further declines in mortgage rates into July and August will probably help keep buyers in the market, especially with better inventory to choose from and less competition forcing price increases and concessions.

Pending home sales in June, which fell 2.1 percent in May percent and 7.7 percent in April, are expected to rebound 1.1 percent.

The National Association of Realtors developed the pending home sales index as a leading indicator of housing activity. Specifically, it is a leading indicator of existing home sales, not new home sales. A pending sale is one in which a contract was signed, but not yet closed. It usually takes four to six weeks to close a contracted sale.

This provides a gauge of not only the demand for housing, but the economic momentum. People have to be feeling pretty comfortable and confident in their own financial position to buy a house. Furthermore, this narrow piece of data has a powerful multiplier effect through the economy, and therefore across the markets and your investments. By tracking economic data such as the pending home sales index which measures home resales, investors can gain specific investment ideas as well as broad guidance for managing a portfolio.

Even though home resales don't always create new output, once the home is sold, it generates revenues for the realtor. It brings a myriad of consumption opportunities for the buyer. Refrigerators, washers, dryers and furniture are just a few items home buyers might purchase. The economic"ripple effect" can be substantial especially when you think a hundred thousand new households around the country are doing this every month.

Since the economic backdrop is the most pervasive influence on financial markets, home resales have a direct bearing on stocks, bonds and commodities. In a more specific sense, trends in the existing home sales data carry valuable clues for the stocks of home builders, mortgage lenders and home furnishings companies.

The National Association of Realtors moved up its publication schedule in 2011. Prior to 2011, the reference month was two months trailing the release date. In 2011, the reference month trails only by one month to the release month.