The housing market showed little signs of slowing down at the end of this summer.

Pending home sales, a leading indicator of the health of the housing market, rose in August, reversing two straight months of declines. The National Association of Realtors’ (NAR) Pending Home Sales Index, which tracks the number of homes that are under contract to be sold, rose 8.1% in August to a seven-month high from the previous month. The results outpaced the expected 1.3% increase in sales, according to Bloomberg analysts’ consensus estimates. Contract signings rose in all four regions of the U.S.

“Rising inventory and moderating price conditions are bringing buyers back to the market,” said Lawrence Yun, NAR’s chief economist, in a press statement. “The more moderately priced regions of the South and Midwest are experiencing stronger signing of contracts to buy, which is not surprising. This can be attributed to some employees who have the flexibility to work from anywhere, as they choose to reside in more affordable places.”

In the South and Midwest pending home sales respectively rose 8.6% and 10.4% last month from July, while sales increased 4.6% in the Northeast and 7.2% in the West. Nationwide, contract signings were down 8.3% from the same month a year ago, an expected drop since there was a surge of activity during the COVID-19 pandemic.

“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.”

According to the NAR, 22% of all existing sales in August were completed by all cash buyers.

The rebound in activity was surprising to some experts who thought rising home prices would deter buyers. The median existing-home price for all housing types in August was $356,700, up 14.9% from August 2020, as prices increased in all four regions of the U.S., the NAR reported last week.

Yun noted that affordability “remains challenging as home price gains are roughly three times wage growth.”

However, some relief in inventory will likely slow down record-breaking home price growth. Total housing inventory, or homes available for sale, at the end of August totaled 1.29 million units, down 1.5% from July’s supply and down 13.4% from one year ago. According to Yun, inventory is still tight but the declines are not as severe. By December or January 2022, he expects inventory "to turn the corner and increase."