Pending home sales in the US posted their biggest gain in 2-1/2 years in January

WASHINGTON (Reuters) – Contracts for purchases of U.S.-owned homes rose in January by the most 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 on Monday that the pending home sales index, based on contracts signed, jumped 8.1% last month, the biggest increase since June 2020. Economists polled by Reuters had forecast contracts, which would become sales a month or two later. , up 1.0%.

A second consecutive monthly increase in contracts could see existing home sales rebound or post another slight decline after posting its 12th consecutive monthly decline in January. Contracts increased in all four regions. Pending home sales fell 24.1% in January year over year.

“Home sales activity appears to have bottomed out in the first quarter of this year, before additional improvements occur,” said NAR chief economist Lawrence Yoon.

The housing market has been hit by the Federal Reserve’s hawkish monetary policy stance, with residential investment contracting for seven consecutive quarters, the longest such stretch since 2009. Despite signs that the worst is over, the housing market may take a while. .

Government data on Friday showed that new home sales jumped to a 10-month high in January. However, mortgage rates resumed their climb after strong data on consumer spending and the labor market as well as strong monthly inflation readings raised the possibility of the US central bank raising interest rates in the summer.

The 30-year fixed rate mortgage rate rose to an average of 6.50% last week from 6.32% the week before, according to data from mortgage financing agency Freddie Mac. The third consecutive weekly increase lifted the price to a three-month high.

(Reporting by Lucia Mutecani) Editing by Andrea Ricci

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