Officials of the International Monetary Fund are urging the U.S. Congress to move promptly to raise the nation's debt ceiling.

An IMF report says inaction could bring sharply increased interest rates that could hurt the U.S. economy and cause problems on world financial markets.

U.S. law requires Congress to approve borrowing more than the currently approved $14.3 trillion debt ceiling. But Washington has already reached that limit and could begin defaulting on debts on August 2 without congressional action.

Opposition Republicans say they will not vote to raise the debt ceiling unless Democrats agree to sharp cuts in spending. Democrats say some tax increases should be considered along with spending cuts.

The IMF also warns in its annual report on the U.S. economy that rising budget deficits pose a risk to the country, but says spending cuts should be spaced out over a number of years.

Another economic report on Tuesday showed the troubled U.S. housing sector improving a bit. The National Association of Realtors says the number of people who signed contracts to buy homes rose sharply in May.

The legal and financial process of buying a home can take a couple of months, so an increase in signed contracts usually means an increase in completed home sales in the near future.

Severe problems in the U.S. housing market played a key role in the financial crisis.