Pending home sales declined on a monthly and yearly basis in January as purchase demand has proven slow to kick into gear in 2026.
Despite homebuyers facing some of the friendliest market conditions they’ve seen in years, contract signings slipped 0.8% from December to land 0.4% lower on a year-over-year basis last month, with sales activity that increased across the Midwest and West unable to offset declines in the Northeast and South.
A massive winter storm that cloaked the country in ice and snow for much of January was cited by the National Association of Realtors as sending contract closings to multiyear lows last month. The group’s latest tally of pending home sales data, published Thursday, underscored the range of other market factors impinging on sales production nationwide.
“Improving affordability conditions have yet to induce more buying activity,” said NAR’s Chief Economist Lawrence Yun, noting that 5.5 million more households were eligible for home loans in January compared to a year ago, due to steady easing in borrowing costs.
But the larger pool of prospective buyers needs a larger pool of homes for sale, he insisted.
“Unless housing supply increases, these additional potential buyers becoming active in the market could simply push up home prices,” said Yun. “This will put increasing pressure on affordability, which is why it is critical to increase supply by building more homes.”
Pending home sales declined 5.7% in the Northeast and 4.5% in the South, while increasing 5% in the West and 4.3% in the Midwest. Annually, contract signings rose 4% in the South and 0.3% in the West but fell 8.3% in the Northeast and 3.3% in the Midwest.
After pending home sales plunged 9.3% across all major U.S. regions in December, regional recoveries amid the overall decline suggest seasonal factors are still weighing on activity.
Mortgage-rate lock data from January further underscores the caution with which buyers were proceeding last month, with purchase lock volumes down 5% year over year, according to mortgage technology provider Optimal Blue.
“Seasonal slowdowns and winter weather can distort both contract activity and closings,” said Sam Williamson, senior economist at First American Financial Corp., sharing his reaction to the pending home sales update with Scotsman Guide.
“Importantly, other leading indicators are moving in a better direction,” added Williamson, noting that “purchase mortgage applications are near their highest level in roughly three years — suggesting underlying demand is gradually firming as we head into spring.”
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.
Several major metros across the U.S. posted sizable yearly gains of pending home sales in January, according to NAR’s data, with contract signings jumping 11.8% in Phoenix, 10.7% in Boston and 10.7% in Charlotte, N.C.
“It is likely that we will see more home buying activity over the coming months as inventory improves,” said Lisa Sturtevant, chief economist of multiple listing service Bright MLS. “But this year buyers will have more leverage than they have had in recent years.”
