(Reuters) – Contracts to buy U.S. previously owned homes fell in December to snap a four-month streak of increases, with particularly sharp declines in the pricier Northeast and West regions as higher mortgage interest rates dented affordability.
The National Association of Realtors (NAR) said on Thursday its Pending Home Sales Index, based on signed contracts, fell 5.5% last month to 74.2 from a downwardly revised 78.5 in November. Economists polled by Reuters had forecast contracts, which become sales after a month or two, would be unchanged in December following a 1.6% increase in November.
Pending home sales fell 5.0% from a year earlier. On a regional basis, signings declined on both a monthly and annual basis in all four regions. Month-over-month the declines were led by an 8.1% drop in the Northeast and a 10.3% slide in the West.
“After four straight months of gains in contract signings, one step back is not welcome news, but it is not entirely surprising,” said Lawrence Yun, the NAR’s chief economist.
The rate on popular 30-year-fixed-rate mortgages has climbed back above 7%, according to the Mortgage Bankers Association, essentially counter-acting the interest rate cuts delivered since September by the Federal Reserve.
The 10-year U.S. Treasury note, which is the top influence in determining rates on most home loans, has climbed sharply since the Fed’s first rate cut. That has occurred as bond market investors have grown concerned about how policies favored by President Donald Trump – such as tariffs, tax cuts and immigration crackdowns – might feed into higher inflation.
(Reporting by Dan Burns; Editing by Andrea Ricci)
