The pending home sales index was at its highest level in April since October last year, but still down 13% compared from last year’s reading, according to a report released by the National Association of Realtors. Price declines are still expected and may even take an even bigger hit.

The index which measures the number of homes under contract to be sold unexpectedly increased in April to 88.2 up by 6.3% from a March reading of 83 and the highest level since October. This was seen as a result of buyers taking a chance on getting bargains.

Despite the increase, the index registered a decline of 13.1% compared to April 2007 and down 29% from the index's peak in April 2005.

NAR revised its existing home price outlook for 2008 downward. The group's June projections see prices falling 6.4% by the end of the year; in May it said 2008 prices would fall by 2.4%.

In conjunction with falling prices, the report issued a slightly improved 2008 forecast for existing home sales. NAR now expects to see home sales dip by 4.5%, whereas in May it expected a decline of 4.7%.

"Bargain hunters have entered the market en masse, especially in areas that have experienced double-digit price declines, but it's unclear if they are investors or owner-occupants," said Lawrence Yun, chief economist for the NAR in a statement.

The Pending Home Sales Index was strongest in the Midwest, where it jumped 13%, and weakest in the Northeast, where it declined 1.9%.

The trade group's Pending Home Sales Index is considered a more forward-looking indicator of home sales than the NAR's closely watched existing home sales report. Unlike existing home sales estimates, pending home sales are usually counted a month or two before a closing sales contract is signed.

The Pending Home Sales index debuted in 2001, and a reading of 100 is equal to results that first year.