Pending home sales rose 3.6 percent from May to June, marking five consecutive months of gains for the first time since July 2003, the National Association of Realtors said.

The gains were spurred by low interest rates and affordable home prices, and were strongest in the South (7.1 percent) and West (2.9 percent), NAR said. Month-over month gains in NAR's pending home sales index were more modest in the Midwest (0.8 percent) and Northeast (0.4 percent).

Looking back a year, the index was up 11.6 percent in the Midwest, 8.9 percent in the South, and 5.8 percent in the Northeast. In the West, however, NAR's pending home sales index was down 0.2 percent from a year ago.

A monthly rise in home prices and somewhat higher mortgage interest rates led to a "modest decline" in affordability in June, NAR said, but another index measuring affordability "remains very favorable."

Although the median existing single-family home price in June was $181,600, a family earning the median income of $60,700 could afford a home costing $289,100 with a 20 percent down payment and 25 percent of their gross income devoted to mortgage payments.

NAR has complained that recent increases in the pending home sales index have not been providing all of the expected boost in closed transactions in subsequent months, in part because appraisals often come in under the contracted sales price.

The group has blamed the situation on new rules for appraisals conducted on loans slated for purchase or guarantee by Fannie Mae and Freddie Mac, and called for their suspension.

Fannie and Freddie's regulator, the Federal Housing Finance Agency, and many appraisers and appraisal management companies, say market forces, not the new rules, are more often the reason valuations come in below the contracted sales price (see story).