Pending home sales activity surged in August as buyers took advantage of low home prices and affordable interest rates, according to the National Association of Realtors. The Pending Home Sales Index, a forward-looking indicator based on contracts signed in August, jumped 7.4 percent from July to August, and stood 8.8 percent higher this August compared to August 2007.  The index is, in fact, at the highest level since June 2007. Home sales are considered pending when the seller has accepted an offer, but the deal has not closed. Generally there is a one- to two-month lag before a sale is completed. Any activity around homebuying is hardly expected considering the recent financial havoc sweeping the nation.  While NAR Chief Economist Lawrance Yun noted the unusual timing of contract activity, he said: "Homebuyers in July were hampered by overly stringent lending criteria in the months before the government takeover of Fannie and Freddie...August shows some unleashing of pent-up demand before the credit crisis accelerated in September.” It's unclear how much contract activity may have been impacted by the credit disruptions on Wall Street, but NAR said it's hopeful most of the increase will translate into closed existing-home sales -- despite almost two months of turmoil amongst the U.S. economy. NAR reported that pending home sales were up strongly in California, Nevada and Florida, all of which have suffered severe blows throughout the housing crisis.  In a month-over-month comparison, the PHSI in the West surged a monstrous 18.4 percent in August and remains 37.8 percent above a year ago. The South experienced the smallest increase in pending home sales activity, with a 2.3 percent increase in August, which is down 2.1 percent from the same time last year. Looking at middle-ground assumptions, NAR projected existing-home sales to be at 5.04 million this year and 5.41 million in 2009.  New-home sales should total around 503,000 this year and 471,000 in 2009.  The start of housing projects, including multifamily units, are likely to fall 28.2 percent to 973,000 units this year and come in around 843,000 in 2009 as builders continue to clear the accumulation in inventory. The unexpected report of increased pending sales activity in August brings promising news, but September's reports may prove to be a different beast. “We need to see just how much of this gain holds up,” Yun said. On the other hand, HW reported a decrease in home asking prices during September, which might ignite a continued-trend in increased sales activity. Editor’s note: To contact the reporter on this story, email