Mortgage rates have reached record lows, making home ownership more affordable than ever before. Americans considering buying a home should feel secure about investing in real estate; the housing market is continuing to improve.

July saw an increase in both the number of homes sold and the number of contracts signed. The number of total existing home sales rose to a seasonally adjusted annual rate of 4.47 million, a growth of 2.3 percent from June's total of 4.37 million. The Pending Home Sales Index―which reflects the number of contracts signed―also increased in July, reaching levels well above those reported last year. July's index of 101.7 is 2.4 percent above June's figures and a full 12.4 percent above July 2011's figures, when the index topped 90.5. The index has fluctuated month to month, but there have been year-over-year gains reported for the past 15 months.

July's quick sales pace was reflected in the time homes stayed on the market. A third of all the homes bought were listed for sale for less than thirty days; only one in five homes remained on the market six months or longer. The median time a home was available for purchase in July was 69 days, a 29.6 percent improvement over July 2011's median time of 98 days.

A driving force behind the quicker sales pace was a drop in inventory. By the end of July, the total inventory of homes on the housing market would have taken 6.4 months to sell at the current sales rate. This is 31.2 percent below inventory levels from a year ago when the supply of homes would take 9.3 months to sell.

The drop in supply coupled with the increase in demand due to low mortgage rates lead to an increase in housing prices. In July, the national median existing home price for all types of housing―including single-family, townhomes, condos, and co-ops―reached $187,300, an increase of 9.4 percent from last year's median price. This represents the strongest gain in housing prices since January 2006, when the median price increased 10.2 percent from 2005 levels. The National Association of Realtor's economists expect the upward trend to continue well into 2013; median existing home prices could rise by 4.5 to 5 percent in 2012, and an additional 5 percent in 2013.