U.S. Pending Home Sales Rose 0.5% in December

By FeaturesDow Jones Newswires

The number of U.S. existing homes going under contract rose for the third straight month in December, reaching their highest level since early 2017.

The National Association of Realtors on Wednesday said its pending home sales index, which tracks contract signings for purchases of previously owned homes, increased 0.5% from the prior month to 110.1 in December. It was its highest level since March 2017. Sales, unless they fall through, typically close within a month or two of signing.

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Economists surveyed by The Wall Street Journal had expected a 0.5% increase from November.

The index was up 0.5% in December from a year earlier.

"Another month of modest increases in contract activity is evidence that the housing market has a small trace of momentum at the start of 2018," said Lawrence Yun, the trade group's chief economist. "Jobs are plentiful, wages are finally climbing and the prospect of higher mortgage rates are perhaps encouraging more aspiring buyers to begin their search now."

But the U.S. housing market has been plagued by limited inventory that has driven up home prices, pricing some out of the market. New-home sales and existing-home sales slowed in December. Home construction also appeared to slide at the end of the year; the number of housing units that began construction fell sharply in December.

"Sadly, these positive indicators may not lead to a stronger sales pace," Mr. Yun said. "Buyers throughout the country continue to be hamstrung by record low supply levels that are pushing up prices -- especially at the lower end of the market."

Mortgage rates have moved higher since mid-2017, but remain historically low. The average interest rate on a 30-year fixed-rate mortgage in December was 3.95%, according to Freddie Mac.

News Corp, owner of The Wall Street Journal, also operates Realtor.com under license from the National Association of Realtors.

Write to Sharon Nunn at sharon.nunn@wsj.com

(END) Dow Jones Newswires

January 31, 2018 10:14 ET (15:14 GMT)

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