Contracts to buy previously owned homes in the United States saw a sharp rise in May, with the National Association of Realtors’ (NAR) index of pending home sales hitting its highest level for the month of May since 2005 and blowing by economists’ expectations. The index rose by 8 percent in May to 114.7, up from 106.2 in April, according to NAR, with a reading of 100 equal to the level of contract activity in 2001. Economists polled by Reuters predicted that the pending home sales measure would drop by 0.8 percent. “May’s strong increase in transactions—following April’s decline, as well as a sudden erosion in home affordability—was indeed a surprise,” said Lawrence Yun, NAR’s chief economist. “The housing market is attracting buyers due to the decline in mortgage rates, which fell below 3 percent, and from an uptick in listings.” Pending home sales were up 13.1 percent in May compared …