By Aarthi SwaminathanandGreg Robb
The numbers: U.S. pending-home sales rose in May by 0.7%, according to the monthly index released Monday by the National Association of Realtors.
Analysts polled by the Wall Street Journal had forecast the pending home sales index to drop by 4%.
This increase breaks a six-month decline, and comes as mortgage rates continue to rise.
Key details: Compared with a year earlier, transactions were down 13.6%. Regionally, the index jumped the most in Northeast, and fell in the Midwest and West.
Big picture: The rise is not likely to change economists’ grim forecast for the housing market.
The index reflects transactions where the contract has been signed for an existing-home sale, but the sale has not yet closed. Economists view it as an indicator for the direction of existing-home sales in subsequent months.
“Despite the small gain in pending sales from the prior month, the housing market is clearly undergoing a transition,” NAR Chief Economist Lawrence Yun said. “Contract signings are down sizably from a year ago because of much higher mortgage rates.”
What are they saying? “It’s a pretty small bounce after six straight declines, so it doesn’t change the story that the housing market is set for a more challenging year ahead due to poor affordability and expected slower job growth,” Sal Guatieri, senior economist at BMO Capital Markets, told MarketWatch.
Market reaction:The Dow Jones Industrial Average and the S&P 500 were both slightly lower in early trading on Monday. The yield on the 10-year Treasury note rose slightly to 3.18%.