Pending home sales increased in December for the first time since May 2022, following six consecutive months of declines, according to the National Association of Realtors (NAR). The Northeast and Midwest recorded month-over-month reductions, while the South and West posted monthly gains.

All four U.S. regions saw year-over-year decreases in transactions, with the West experiencing the largest decline at 37.5 percent.

The Pending Home Sales Index (PHSI), a forward-looking indicator of home sales based on contract signings, improved 2.5 percent to 76.9 in December. Year-over-year, pending transactions dropped by 33.8 percent. An index of 100 is equal to the level of contract activity in 2001.

“This recent low point in home sales activity is likely over,” NAR Chief Economist Lawrence Yun said in a release. “Mortgage rates are the dominant factor driving home sales, and recent declines in rates are clearly helping to stabilize the market.”

The Northeast PHSI dropped 6.5 percent from last month to 64.7, a decrease of 32.5 percent from December 2021. The Midwest index shrank 0.3 percent to 77.6 in December, a decline of 30.1 percent from one year ago.

The South PHSI rose 6.1 percent to 94.1 in December, dropping 34.5 percent from the prior year. The West index advanced 6.4 percent in December to 58.6, decreasing 37.5 percent from December 2021.

“The new normal for mortgage rates will likely be in the 5.5 percent to 6.5 percent range,” Yun said. “Job gains will steadily become important in driving local home-sales markets. The South is set to outperform the rest of the country, thanks primarily to better job market conditions in this part of the country compared to other regions.”