Pending sales bounced back in May, hitting their highest mark in two years.

The National Association of Realtors’ Pending Home Sale Index bounced back to positive territory in May, rising 5.9 percent to its highest level in two years.

With a reading of 101.1, the index is 13.3 percent higher than a year ago, when it was 89.2, and that’s the highest it’s been since April 2010, when contract activity increased from the first-time homebuyer tax credit.

Other details NAR singled out were:

• Contract signings have increased year-over-year for 13 consecutive months.
• The market is on track to see a 9 to 10 percent improvement in total home sales for 2012.
• Regionally, the index rose in the Midwest by 6.3 percent, where it’s 22.1 percent higher than last year, and in the South, the index was up 1.1 percent monthly and 11.9 percent year-over-year.
• Going forward, NAR Chief Economist Lawrence Yun said that low inventories could impact contract activity. “If credit conditions returned to normal and if we had more inventory, especially in the lower price ranges, more people would become successful buyers,” he said.

Tere Shelton Bernace, the broker/co-owner of Shelton and Stewart Realtors and advisory board member of the Master Brokers Forum, said that though contract activity has risen by quite a bit in the Coral Gables and Waterfront markets, it has come at a cost – with inventories now as low as they are (just over 4 months supply, according to MAR), buyer options are few and far between, especially in the luxury markets Bernace serves.

“I see a vicious cycle,” Bernace said, “where sellers will not sell because they can’t see what to buy.”

One possibility, she continued, is that prices will continue to rise, and that will motivate more sellers to enter the market and add to the inventory, but before then, agents need to show sellers that, as Bernace put it, “now is a good time to list.”