With increases in the South and West offset weakening activity in the Northeast and Midwest, the National Association of Realtors released a report on Monday showing that pending home sales increased by much more than expected in the month of December.
NAR said its pending home sales index jumped 1.6 percent to 109.0 in December after tumbling by 2.5 percent to 107.3 in November. Economists had expected pending home sales to increase by 0.6 percent.
A pending home sale is one in which a contract was signed but not yet closed. Normally, it takes four to six weeks to close a contracted sale.
NAR chief economist Lawrence Yun said, "Pending sales rebounded last month as enough buyers fended off rising mortgage rates and alarmingly low inventory levels to sign a contract."
"The main storyline in the early months of 2017 will be if supply can meaningfully increase to keep price growth at a moderate enough level for households to absorb higher borrowing costs," he added. "Sales will struggle to build on last year's strong pace if inventory conditions don't improve."
The bigger than expected increase in pending home sales came as pending home sales in the South surged up by 2.4 percent and pending home sales in the West spiked by 5.0 percent.
On the other hand, pending home sales in the Northeast slumped by 1.6 percent and pending home sales in the Midwest fell by 0.8 percent.
NAR said existing-home sales are forecast to be around 5.54 million this year, an increase of 1.7 percent from 2016, which was the best year of sales since 2006.
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