Pending home sales fell for the sixth consecutive month as mortgage rates took off as the US Federal Reserve raised interest rates.

Pending home sales beat analysts' expectations.

Analysts surveyed by the Wall Street Journal had predicted a 1% decline in the pending home sales index.

Contract signings rose in the South and West.

Pending home sales reflect transactions for which contracts have been signed for the sale of existing homes, but the sale has not yet been completed.

Economists see this as an indicator of the direction of existing home sales in subsequent months.

Mortgage application activity hinted at a further recovery in the housing market. Demand for mortgages rose in the latest week.

Key details. The number of transactions fell by 33.8% compared to a year ago.

On a monthly basis, pending sales increased in the South and West regions. Sales in the North East and West Midlands declined.

Pending home sales in the West have fallen the most since last December, by 37.5%.

Falling interest rates have boosted demand for mortgages, buyers are returning to the market and the housing market is slowly recovering.

However, inventory remains low due to the persistence of sellers. Many are looking forward to spring to see if sellers are motivated to put their homes on the market.

"The recent lows in home sales activity may be behind us," said NAR Chief Economist Lawrence Yun." Mortgage rates are the leading factor driving home sales and the recent drop in rates has clearly helped stabilise the market."

Yun expects mortgage rates to hover between 5.5 per cent and 6.5 per cent.

He also expects sales in the South to be better than in other regions because of the stronger job market in that area.

"The sales slump is coming to an end, but the fall in house prices has only just begun," he added. He expects house prices to fall by 15 per cent next year.