July Pending Home Sales Rise 1.3%

A measure of homes under contract for sale rose in July, a sign of steady demand amid low interest rates and rising employment.

The National Association of Realtors' pending home sales index, which tracks contract signings for purchases of previously owned homes, increased a seasonally adjusted 1.3% to 111.3 in July, the trade group said Wednesday. Sales then typically close within a month or two of signings.

Economists surveyed by The Wall Street Journal had expected a 0.7% rise.

The index had registered at a downwardly revised 109.9 in June. It reached a post-housing bust peak of 115.0 in April and now sits at the second-highest level of 2016.

July's reading was 1.4% above its year-ago level.

"More home shoppers having success is good news for the housing market heading into the fall, but buyers still have few choices and little time before deciding to make an offer on a home available for sale," said Lawrence Yun, NAR's chief economist.

News Corp., owner of The Wall Street Journal, also owns Move Inc., which operates a website and mobile products for the National Association of Realtors.

Pending sales were up in July across most of the country. In the Northeast the index rose 0.8% to 96.8, in the South it was up 0.8% to 123.9 and in the West it jumped 7.3% to 108.7.

Pending sales fell in the Midwest. The index for the region decreased 2.9% to 105.8 in July.

The housing market has been a relative bright spot in the economy in recent years, though it has shown signs of cooling amid high prices and tight inventories. Last week, the Realtors group reported that the pace of existing-home sales fell 3.2% last month from June to a seasonally adjusted annual rate of 5.39 million.

A separate report Tuesday showed home prices posted another strong gain. The S&P CoreLogic Case-Shiller Indices, covering the entire nation, rose 5.1% in the 12 months ended in June, identical to the increase reported in May.

"There's little doubt there'd be more sales activity right now if there were more affordable listings on the market," Mr. Yun said.

Low mortgage rates and continued job creation are luring more would-be buyers into the market.

The average 30-year fixed-rate mortgage has held below 3.5% for nine consecutive weeks, Freddie Mac said last week.

U.S. employers, meanwhile, have been generating jobs at a healthy clip in recent months. Nonfarm payrolls rose a seasonally adjusted 255,000 in July, the Labor Department said early in August. The August report is due out Friday.

Even so, the U.S. homeownership rate fell to the lowest level in more than 50 years in the second quarter of 2016, a reflection of the lingering effects of the housing bust, financial hurdles to buying and shifting demographics across the country.

Write to Jeffrey Sparshott at jeffrey.sparshott@wsj.com