U.S. pending home sales unexpectedly rebound in May

WASHINGTON (Reuters) - US home-buying contracts unexpectedly rose in May after six straight months of decline, but higher mortgage rates are cooling demand for housing.
The National Association of Realtors (NAR) said Monday its Pending Home Sales Index, based on signed contracts, rose 0.7% over the past month to 99.9, recovering from a two-year low in April. Pending home sales rose in the Northeast and the populous South, but fell in the West and Midwest.
Economists polled by Reuters had forecast contracts that become sales after a month or two would fall 3.7%. Pending home sales plunged 13.6% year over year in May.
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"Despite the small month-on-month increase in pending sales, the housing market is clearly in a state of upheaval," said NAR Chief Economist Lawrence Yun. "Deal signings have dropped significantly due to much higher mortgage rates compared to last year."
Last week's data showed that home sales fell for a fourth straight month in May, hitting a two-year low as prices surpassed $400,000 for the first time. The median single-family home price in May rose 14.6% year-on-year to $414,200.
The average contract rate for a 30-year fixed-rate mortgage rose last week to more than a 13-1/2-year high of 5.81% from 5.78% the previous week, according to data from mortgage financing agency Freddie Mac. The interest rate has risen more than 250 basis points since January as inflation expectations rose and the Federal Reserve aggressively hiked interest rates.
The NAR estimates that at the median single-family home price and with a 10% down payment, the monthly mortgage payment has increased by about $800 since the beginning of the year.
(Reporting by Lucia Mutikani; Editing by Chizu Nomiyama)

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