Pending home sales in February surged to their highest level since June 2013, continuing the record high set last month, according to the latest report from the National Association of Realtors.

This is good news for the industry as it heads into the spring homebuying season, especially given that 2015 is off to a bad start for housing in terms of housing starts, completions and permits. Existing home sales tumbled in January, and mortgage applications have been spiraling downward in February, giving away most of the gains made in January.

The Pending Home Sales Index, a forward-looking indicator based on contract signings, grew 3.1% to 106.9 in February from a slight downward revision of 103.7 in January and is now 12% above February 2014 (95.4).

The index is at its highest level since June 2013 (109.4), has increased year-over-year for six consecutive months and is above 100 – considered an average level of activity – for the 10th consecutive month.

“Pending sales showed solid gains last month, driven by a steadily-improving labor market, mortgage rates hovering around 4% and the likelihood of more renters looking to hedge against increasing rents,” said Lawrence Yun, NAR chief economist.

“These factors bode well for the prospect of an uptick in sales in coming months. However, the underlying obstacle – especially for first-time buyers – continues to be the depressed level of homes available for sale.”

Growth in the Midwest and West worked to offset smaller declines in the Northeast and South.

“Several markets remain highly-competitive due to supply pressures, and Realtors are reporting severe shortages of move-in ready and available properties in lower price ranges,” Yun said. “The return of first-time buyers this year will depend on how quickly inventory shows up in the market.”

Looking across the nation, the PHSI in the Northeast fell 2.3% to 81.7 in February, but is 4.1% above a year ago. In the Midwest the index leaped 11.6% to 110.4 in February, and is now 13.8% above February 2014.  

Pending home sales in the South decreased 1.4% to an index of 120.2 in February, but is still 10.8% above last February.

In addition, the index in the West climbed 6.6% in February to 102.1 (highest since June 2013 at 111.4) and is now 18.3% above a year ago.