Pending Home Sales: Trends and Forecast 2026

Here's the straight talk: pending home sales took a noticeable dip in December, both from the month before and the year prior. This signals that the housing market, while showing some flashes of life, still has a bumpy road ahead.

As someone who's been navigating the real estate waters for a while, I always pay close attention to the pending home sales figures. They’re like a rearview mirror for the housing market – they show us what agreements were made, what contracts were signed, and where things were headed before a sale actually closes. The National Association of REALTORS® (NAR) recently released their Pending Home Sales Report for December 2025, and the numbers have definitely given us something to ponder.

Let’s break down what these figures really mean, beyond just percentages.

Pending Home Sales: What the Latest Numbers Tell Us About the Housing Market

The Big Picture: December's Dip

The NAR report tells us that pending home sales fell by 9.3% from November to December. That might sound like a lot, and it is a significant drop. More importantly, when we look at the year-over-year picture, pending sales were down 3.0%. This means fewer deals were being put under contract in December compared to the previous year.

It’s my experience that these month-to-month swings can sometimes be a bit noisy. Factors like holidays, people taking vacations, and even just bad weather can throw a wrench in home showings and contract signings. NAR Chief Economist Lawrence Yun pointed this out, noting that interpreting winter data, especially in December, can be tricky. We need to watch what happens in the coming months to see if this was just a blip or the beginning of a bigger trend.

Regional Breakdown: A Mixed Bag

When I look at the regional data, it really highlights the diverse nature of our housing market. Not every part of the country is experiencing the same thing.

• Northeast: Saw a 11.0% decrease month-over-month and a 3.6% decrease year-over-year.
• Midwest: Experienced the sharpest decline, with a 14.9% drop month-over-month and a 9.8% decrease year-over-year.
• South: Showed resilience with a smaller month-over-month decline of 4.0%, but managed a 2.0% increase year-over-year. This is a bright spot, and I often see the South leading the way in housing trends.
• West: Faced a significant 13.3% decrease month-over-month and a 5.1% decrease year-over-year.

It’s fascinating to see the South bucking the trend with a year-over-year gain. This often points to stronger job growth, more affordable housing options, or simply a migration of people seeking a better quality of life. On the other hand, the larger declines in the Northeast, Midwest, and West suggest these areas might be more sensitive to economic shifts or perhaps dealing with higher housing costs.

Why the Decline? Inventory is Key

One of the most crucial takeaways from the NAR report, in my opinion, is the connection between low inventory and declining pending sales. The report mentions that while closed sales increased in December, new listings didn’t keep up. This resulted in inventory levels shrinking, even matching the lowest point of 2025.

I can't stress enough how important inventory is to buyer confidence. When potential buyers see a limited number of homes on the market, they can become hesitant. They want options, they want to feel like they have a choice, and they don't want to feel rushed into making one of the biggest financial decisions of their lives. When inventory is scarce, it can dampen consumer enthusiasm, even if interest rates are favorable. It's a catch-22: low inventory can slow sales, which can lead to even lower inventory moving forward.

What Else the REALTORS® Confidence Index Tells Us

Beyond the pending sales numbers, the REALTORS® Confidence Index (RCI) provides a great pulse check from those on the front lines. Here are a few key insights from their December survey:

• Time on Market: The median time homes spent on the market was 39 days, up from 36 days the previous month and 35 days in December 2024. This slight increase suggests homes are taking a bit longer to sell, which is often a characteristic of a cooling market.
• First-Time Homebuyers: The percentage of sales to first-time homebuyers dipped slightly to 29%, down from 30% last month and 31% a year ago. This is something I watch closely because first-time buyers are critical to fueling the housing market. A decline here can signal affordability issues or difficulty in saving for a down payment.
• Cash Sales & Investors: Cash sales saw a slight increase to 28%, and individual investors or second-home buyers made up 18% of transactions. This indicates that while some buyers are facing challenges, those with cash or investment backing are still actively participating.
• Distressed Sales: Foreclosures and short sales remained very low at 2%, which is a positive sign that we're not seeing a wave of distressed properties hitting the market.
• Future Outlook: Importantly, 31% of NAR members expect an increase in buyer traffic over the next three months, up from 22% last month. Similarly, 28% expect an increase in seller traffic, up from 18% last month. This optimism from REALTORS® is a crucial indicator. It suggests that despite the December dip, professionals in the field are sensing a potential uptick in activity in the near future.

Looking Ahead – The Forecast

The December pending home sales report paints a picture of a market that's still finding its footing. The declines are not ideal, but they come with important context. The persistent issue of low inventory is a major driver of buyer hesitation, and the regional variations show that real estate is anything but monolithic.

However, the positive sentiment from REALTORS® about future buyer and seller traffic is a glimmer of hope. We need to see more homes come onto the market to truly reignite buyer enthusiasm. It’s a complex dance between interest rates, affordability, economic stability, and the sheer availability of homes for sale. I’ll be keeping a close eye on these numbers in the coming months to see if the December slowdown was a temporary hiccup or the start of a more prolonged adjustment.

Pending Home Sales Trends for the Last 12-Months

The table shows data from regarding pending home sales in four regions of the United States – Northeast, Midwest, South, and West. The data reveals interesting trends in pending home sales across the regions. The National Association of Realtors (NAR) publishes monthly data on pending home sales, which is seasonally adjusted and presented in the form of a seasonally adjusted annual rate (SAAR) in thousands.

Here is the tabular data of pending home sales from November 2024 to November 2025. The units displayed are in thousands and are the seasonally adjusted annual rate.

Pending Home Sales Index Explained

The Pending Home Sales Index is a leading indicator for the housing sector, based on pending sales of existing homes. A sale is listed as pending when the contract has been signed but the transaction has not closed, though the sale usually is finalized within one or two months of signing. Pending contracts are good early indicators of upcoming sales closings. However, the amount of time between pending contracts and completed sales is not identical for all home sales.

Variations in the length of the process from pending contract to closed sale can be caused by issues such as buyer difficulties with obtaining mortgage financing, home inspection problems, or appraisal issues. According to the National Association of REALTORS®, the index is based on a sample that covers about 40% of multiple listing service data each month.

In developing the model for the index, it was demonstrated that the level of monthly sales-contract activity parallels the level of closed existing-home sales in the following two months. An index of 100 equals the average level of contract activity during 2001, which was the first year to be examined. By coincidence, the volume of existing home sales in 2001 fell within the range of 5.0 to 5.5 million, which is considered normal for the current U.S. population.