US pending home sales unexpectedly rise in August, trend remains weak

WASHINGTON, Sept 17 (Reuters) - Contracts ‌to purchase ​previously ​owned U.S. homes unexpectedly rose in August, but the gain is likely to be temporary as elevated ‌mortgage rates continue to sideline some prospective buyers and ⁠weigh on housing demand.

The pending home sales index increased 0.3% to 71.2 last ‌month, the National Association ‌of Realtors said on Thursday. Economists polled by Reuters had forecast contracts, which become sales after a month or two, ​declining 0.6%. Contracts increased in the South and West regions. They dropped in the Northeast and Midwest regions.

Pending home ⁠sales fell 4.7% year-on-year in August.

Mortgage rates remained elevated in August, rising further in ​recent weeks in tandem with a surge in longer-term U.S. Treasury yields, which have been boosted by ​inflation amid the U.S.-led war with ‌Iran as well as uncertainty over the Federal Reserve's response. A ballooning national debt has also driven ⁠yields higher, with the benchmark 10-year Treasury bond yield hovering around 5.0%.

The U.S. central bank on Wednesday raised interest rates for the ⁠first time since July 2023. The 30-year fixed mortgage rate averaged 6.76% last ​week, the highest level in more than a year, up from 6.71% in the prior week, data from mortgage finance firm Freddie Mac showed.

"Nationally, contract ‌signings today are running roughly 30% below where they were in the years leading up to ‌the pandemic," said Lawrence Yun, the NAR's chief economist. "Transaction activity ⁠peaked in 2021 when mortgage ‌rates fell to ​near 3%, a historic low, and has not approached that level since."

(Reporting by Lucia Mutikani; Editing by ‌Andrea Ricci)

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