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Pending sales of U.S. homes unexpectedly rose to a seven-month high in October as a brief drop in mortgage rates lured buyers. A National Association of REALTORS® gauge of contract signings increased 2% to 77.4 last month. That was well above all estimates in a Bloomberg survey, the median of which called for a 2% drop.
Homebuyers frustrated by elevated financing costs got a short-lived reprieve in late summer when mortgage rates hit a two-year low. That spurred a wave of homebuying that continued into October, even though rates began to rise again.
“Homebuying momentum is building after nearly two years of suppressed home sales,” NAR Chief Economist Lawrence Yun said in a statement. “Even with mortgage rates modestly rising despite the Federal Reserve’s decision to cut the short-term interbank lending rate in September, continuous job additions and more housing inventory are bringing more consumers to the market.”