After reporting decreases in U.S. pending home sales for six straight months, the National Association of Realtors released a report on Friday showing pending home sales unexpectedly rebounded in the month of December.
NAR said its pending home sales index jumped by 2.5 percent to 76.9 in December after tumbling by 2.6 percent to a revised 75.0 in November.
The rebound surprised economists, who had expected pending home sales to decrease by another 0.9 percent compared to the 4.0 percent nosedive originally reported for the previous month.
Despite the monthly increase, however, pending home sales in December were down by 33.8 percent compared to the same month a year ago.
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.
“This recent low point in home sales activity is likely over,” said NAR Chief Economist Lawrence Yun. “Mortgage rates are the dominant factor driving home sales, and recent declines in rates are clearly helping to stabilize the market.”
The unexpected monthly rebound reflected strength in the South and West, where pending home sales surged by 6.1 percent and 6.4 percent, respectively.
On the other hand, pending home sales in the Midwest edged down by 0.3 percent, while pending home sales in the Northeast plunged by 6.5 percent.
“Job gains will steadily become important in driving local home-sales markets,” Yun said. “The South, in particular, is set to outperform the rest of the country, thanks primarily to better job market conditions in this part of the country compared to other regions.”