(RTTNews) - After reporting four straight monthly increases by U.S. pending home sales, the National Association of Realtors released a report on Thursday showing pending home sales unexpectedly pulled back sharply in the month of December.
NAR said its pending home sales index plunged by 5.5 percent to 74.2 in December after jumping by 1.6 percent to a downwardly revised 78.5 in November.
Economists had expected pending home sales to rise by 0.4 percent compared to the 2.2 percent surge originally reported for the previous month.
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.
"After four straight months of gains in contract signings, one step back is not welcome news, but it is not entirely surprising," said NAR Chief Economist Lawrence Yun. "Economic data never moves in a straight line."
He added, "High mortgage rates have not significantly dented housing demand due to greater numbers of cash transactions."
The sharp pullback by pending home sales reflected decreases in all four regions of the country, with the West and Northeast leading the way lower.
Pending home sales in the West and Northeast plunged by 10.3 percent and 8.1 percent, respectively. Pending home sales in the Midwest also tumbled by 4.9 percent, while pending home sales in the South slumped by 1.7 percent.
"Contract activity fell more sharply in the high-priced regions of the Northeast and West, where elevated mortgage rates have appreciably cut affordability," said Yun. "Job gains tend to have greater impact in more affordable regions."
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