According to new data from the National Association of Realtors, a leading indicator for housing market activity jumped in May and reversed six months of declines.
As buyers have struggled with higher mortgage rates, sales were down from a year ago.
Analysts were expecting a drop of up to 4% in pending home sales in May, but they were surprised by a slight rise in the month.
Home sales were up in the Northeast, but down in the Midwest and West.
The year-over-year decline in pending home sales was more pronounced in the major regions, as buyers have had to contend with rising mortgage rates.
The average interest rate on the popular 30-year fixed mortgage home loan is close to its highest level since the 2008 financial crisis.
The average rate on a 30-year fixed mortgage rose as high as 5.6% in early May before closing out the month at 5%, according to Mortgage News Daily.
The 30-year fixed mortgage rate went up again in June, but then went down a bit over the last week or so, to 5.85% on Monday.
The housing market is clearly undergoing a transition despite the small gain in pending sales from the prior month. Contract signings are down from a year ago.
Home sales and mortgage applications have taken a hit because of rising interest rates. Home builder confidence and traffic of prospective buyers have both declined recently. Home buying has become more expensive with experts predicting that demand in the housing market is set to fall due to the Federal Reserve hiking interest rates.
According to the National Association of Realtors, the housing market is not balanced. Increasing mortgage rates is damaging to consumers and the economy. The need to increase supply to tame home price growth and improve the chances of ownership was indicated by the year-over-year declines in contract activity.
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