WASHINGTON (Reuters) – US pre-owned home purchases unexpectedly rose in May after falling for six straight months, but higher mortgage rates are dampening demand.
The National Association of Realtors said on Monday that its Pending Home Sales Index, based on signed contracts, rose 0.7% last month to 99.9, rebounding from a two-year low in April.
Economists polled by Reuters projected that contracts, which turned into sales after a month or two, would fall 3.7%. Pending home sales were down 13.6% in May from a year earlier.
“Despite the small gain in pending sales compared to the previous month, the housing market is clearly undergoing a transition,” said brokers association chief economist Lawrence Yun. “Contract signings are down considerably from a year ago because of much higher mortgage rates.”
The average rate on a 30-year fixed-rate mortgage rose last week to a 13-1/2-year high of 5.81% from 5.78% the week before, according to mortgage finance agency data. Freddie Mac.
The rate has risen more than 250 basis points since January as inflation expectations rise and the Federal Reserve aggressively raises interest rates.
(Reporting by Lucia Mutikani)
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