Pending home sales sank 9.3% on a seasonally adjusted, monthly basis from November to December despite consistent improvements in affordability that boosted purchasing power for buyers as 2025 came to a close.
The latest data from the National Association of Realtors (NAR) shows contract signings declined on a monthly basis across the four major U.S. regions, while only rising annually in the South. Pending sales nationwide were down 3% in December from a year ago.
“After several months of encouraging signs in pending contracts and closed sales, the December new contract figures have dampened the short-term outlook,” said NAR Chief Economist Lawrence Yun in Wednesday’s release of pending sales data.
Monthly pending sales declined most sharply in the Midwest, which dropped nearly 15% from November, followed by the West, Northeast and South, which declined 13.3%, 11% and 4%, respectively.
“As a forward‑looking indicator based on contract signings, the decline signals a notable pullback after several months of rising momentum,” said Sam Williamson, senior economist at title insurance giant First American Financial Corp., sharing his reaction to Wednesday’s pending sales data with Scotsman Guide.
“Lower mortgage rates, improving affordability and growing inventory had brought more buyers back into the market this fall,” Williamson added.
Other than annual gains of 2% in the South, annual declines of 9.8%, 5.1% and 3.6% were posted in the Midwest, West and Northeast.
Yun noted that new listings activity failed to keep pace with increased closing activity last month, suggesting the sharp decline in pending sales “could be a result of dampened consumer enthusiasm about buying a home when there are so few options listed for sale.”
There were 1.18 million homes on the market in December, matching the lowest inventory levels of 2025, according to NAR data.
“Lower mortgage rates are helping to improve affordability in the year ahead, but economic uncertainty is holding some prospective buyers back,” said Lisa Sturtevant, chief economist at multiple-listing service Bright MLS, in commentary shared with Scotsman Guide.
She added that “today’s report shows that many others are taking a wait-and-see approach to see if market conditions become more favorable in 2026.”
Pending sales provide an indicator of upcoming closed home sales, though the duration between pending contracts and completed sales can vary from a few weeks to a few months. Some pending contracts fall through and never translate to closed sales.
Contract signings had jumped 3.3% in November, the strongest contract activity since 2023, which translated to a more than 5% gain in existing-home sales in December. Hence, December’s decline in pending sales may correspond to a retreat in closed transactions in January.
An update to the Realtor Confidence Index released concurrently with December’s pending sales data showed a slight rise from November in the portion of NAR members who expect homebuying activity to improve in the near term.
Almost one-third (31%) of NAR members said they expect an increase in buyer traffic over the next three months, up from 22% in November, 17% in October and 27% one year ago, while 28% expect an increase in seller traffic, up from 18% last month and 27% last year.
“We’ll be watching the data in the coming months to determine whether the soft contract signings were a one-month aberration or the start of an underlying trend,” added Yun.
