Pending home sales increased in May according to an industry report. The rise is the fourth straight month indicating a positive sign that the housing sector was well on its way to recovery.

The Pending Home Sales Index increased 0.1 percent to 90.7 as reported Wednesday by the National Association of Realtors (NAR). The index improved 6.7 percent compared with May 2008 when it was 85. It was the first time that the index increased for four straight months in nearly five years.

The NAR attributes the increase in pending home sales to the $8,000 first-time homebuyer tax credit that was included in the Obama administration's stimulus package and lower home prices. Industry analysts had forecast no growth at all in the index for the month, according to Briefing.com, expecting it to settle back after ramping up 6.7% in April.

NAR's Housing Affordability Index stayed at near historic highs, although it fell in May to 171.6 from 178.8 a month earlier. That was the high point for the index, which dates back to 1970.

"Under these conditions the typical family would devote only 14.6% of gross income to mortgage principal and interest, which is one of the lowest percentages on record," said Lawrence Yun, chief economist for NAR.

But construction spending was still hobbling as the Commerce Department reported that construction spending fell 0.9 percent in May.

Construction rose 0.6 percent in April, down from the 0.8 percent increase originally reported. A March increase of 0.4 percent was replaced with a decline of the same amount.

For May, the only strength came in nonresidential activity. Residential construction fell sharply, and spending on federal, state and local projects also declined.

Residential building fell 3.4 percent after a flat reading in April. Spending on private home building dropped 33.9 percent compared to last year.

Nonresidential construction improved 0.5 percent with spending on transportation, power projects and manufacturing included.