Pending home sales fell sharply in December

Stagnant mortgage rates, declining housing supply, and continuing economic uncertainty weighed heavily on homebuyers in December.

Pending home sales, a measure of contracts signed on existing homes, fell 9.3% last month compared to November, according to the National Association of Realtors. Analysts were expecting slight gains.

Sales were 3% lower than in December 2024.

“The housing sector is not out of the woods yet,” said Lawrence Yun, chief economist at Realtors. “After several months of encouraging signs in pending contracts and closed sales, new contract numbers for December have dampened the short-term outlook.”

Sales declined month over month in all regions of the United States and were higher year over year only in the South.

Homes also stayed on the market longer in December, with an average of 39 days compared to 35 days in December 2024.

Mortgage interest rates barely moved in December, when these deals were signed. The average interest rate on a 30-year fixed loan is about 6.25%, according to Mortgage News Daily. That’s slightly lower than during the summer, but consumers were also facing a market with fewer homes available for sale.

There were just 1.18 million homes on the market in December, down 9% from November, and matching the lowest level of inventory for 2025. Inventory is up 12% from a year ago, but that’s below a very low level.

“Consumers prefer to see abundant inventory before making the major decision to purchase a home. Therefore, the decline in pending home sales may be a result of consumers’ weak enthusiasm about purchasing a home when there are so few options listed for sale,” Yoon added.