WASHINGTON, Feb 27 (Portal) – US home purchase contracts rose at their fastest pace in more than 2-1/2 years in January, but a rebound in mortgage rates could delay a long-awaited turnaround in the housing market.
The National Association of Realtors (NAR) said Monday that its pending home sales index, based on signed contracts, rose 8.1% over the past month, the biggest rise since June 2020. Economists polled by Portal had forecast contracts , which become sales after a month or a month two, up 1.0%.
The second straight monthly increase in contracts could mean existing home sales recover or post another small drop after posting their 12th straight monthly decline in January. Contracts increased in all four regions. Pending home sales fell 24.1% year over year in January.
“In the first quarter of this year, home sales activity appears to have bottomed out before incremental improvements will materialize,” said NAR chief economist Lawrence Yun.
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The housing market has been hit by the Federal Reserve’s aggressive monetary stance, with housing investment contracting for seven straight quarters, the longest such streak since 2009. Despite signs the worst is over, it could be a while before the housing market reverses .
Government data on Friday showed that new home sales rose to a 10-month high in January. But mortgage rates have resumed their rise after robust consumer spending and jobs data, along with strong monthly inflation data, raised the prospect of a US Federal Reserve rate hike into the summer.
The interest rate on 30-year fixed-rate mortgages rose to an average of 6.50% last week from 6.32% the previous week, according to data from mortgage financing agency Freddie Mac. The third consecutive weekly increase took the rate to a three-month high.
Reporting by Lucia Mutikani; Editing by Andrea Ricci
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