US pending home sales increase to a six-month high in May

WASHINGTON, June 17 (Reuters) – Contracts to purchase previously owned U.S. homes increased more than expected in May, though higher mortgage rates and tight supply remained constraints for the housing market.

The pending home sales index rose 3.8% last month to 76.8, the highest level since last November, the National Association of Realtors said on Wednesday. Economists polled by Reuters had forecast contracts, which become sales after a month or two, increasing 0.8%. Contracts increased in all four regions, soaring 8.7% in the Northeast and surging 8.1% in the Midwest.

They jumped 4.8% year-on-year in May.

Mortgage rates have risen as the U.S.-backed war with Iran drove up oil prices, boosting inflation and Treasury yields. The rate on the popular 30-year fixed-mortgage has increased more than 50 basis points since the conflict started in late February, data from mortgage finance agency Freddie Mac showed.

Washington and Tehran on Sunday said they had agreed terms to end ​the war and reopen the Strait of Hormuz.

“The inventory-constrained Northeast region, which has seen faster home price growth but slower home sales for several months, is now showing more buyer contract signings,” said Lawrence Yun, the NAR’s chief economist. “More supply is needed to help moderate home price growth.”

(Reporting by Lucia Mutikani; Editing by Andrea Ricci)