U.S. existing home sales rose in June to their highest level in over eight years, a sign of pent-up demand that should buoy the housing market recovery and overall economy.

The National Association of Realtors (NAR) reported home resales increased 3.2% to a seasonally adjusted annual rate of 5.49 million in June, up from 5.32 million in May. Sales are now at their highest pace since February 2007 (5.79 million) and have increased year-over-year for nine consecutive months.

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Lawrence Yun, NAR’s chief economist, said this year’s spring buying season has been the strongest since the downturn. “Buyers have come back in force, leading to the strongest past two months in sales since early 2007,” he added. “This wave of demand is being fueled by a year-plus of steady job growth and an improving economy that’s giving more households the financial wherewithal and incentive to buy.”

The median existing-home price in June was$236,400, which is 6.5% above June 2014 and surpasses the peak median sales price set in July 2006 ($230,400). June’s price increase also marks the 40th consecutive month of year-over-year gains.

Total housing inventory at the end of June inched 0.9% to 2.30 million existing homes available for sale, and is 0.4% higher than a year ago (2.29 million). Unsold inventory is at a five-month supply at the current sales pace, down from 5.1 months in May.

“Limited inventory amidst strong demand continues to push home prices higher, leading to declining affordability for prospective buyers,” Yun said. “Local officials in recent years have rightly authorized permits for new apartment construction, but more needs to be done for condominiums and single-family homes.”

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Although supply remains constrained, recent data shows the economy and housing market remains on firmer footing.  June’s existing home sales report comes on the heels of last week’s strong housing starts and building permits data. Additionally, a tightening labor market is starting to push up wages, helping to boost demand for housing, especially among young adults.

Regional Breakdown of Existing Home Sales

June existing-home sales in the Northeast climbed 4.3% to an annual rate of 720,000, and are now 12.5% above a year ago. The median price in the Northeast was $281,200, which is 3.9%  higher than June 2014, according to NAR.

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In the Midwest, existing-home sales rose 4.7% to an annual rate of 1.33 million in June, and are 12.7% above June 2014. The median price in the Midwest was $190,000, up 7.2% from a year ago.

Existing-home sales in the South increased 2.3% to an annual rate of 2.20 million in June, and are 7.3% above June 2014. The median price in the South was $205,000, up 7.2% from a year ago.

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(Source: National Association of Realtors)