Pending home sales in the United States experienced a significant downturn in December, falling by 9.3% compared to the previous month. The decline marks a reversal after several months of more encouraging signs, casting uncertainty on the housing market's short-term future.
On a year-over-year basis, contract signings were down 3.0%, with declines reported across most of the country, according to new data from the National Association of REALTORS® (NAR).
Key Takeaways
- Pending home sales dropped 9.3% month-over-month in December 2025.
- Compared to December 2024, sales were down 3.0% nationally.
- All four major U.S. regions saw month-over-month declines, with the Midwest reporting the steepest drop.
- Economists suggest that historically low housing inventory is a primary factor dampening buyer activity.
- Despite the national slowdown, several local markets, particularly in the South and Midwest, showed strong year-over-year growth.
A Nationwide Slowdown Ends the Year
The latest figures indicate a broad cooling in housing market activity as 2025 came to a close. The 9.3% month-over-month drop in pending sales, which track signed contracts on existing homes, was felt across all regions.
The Midwest experienced the most significant monthly decrease at 14.9%, followed by the West at 13.3% and the Northeast at 11.0%. The South saw a more moderate decline of 4.0% from November.
“The housing sector is not out of the woods yet,” said NAR Chief Economist Lawrence Yun. “After several months of encouraging signs in pending contracts and closed sales, the December new contract figures have dampened the short-term outlook.”
Regional Year-Over-Year Performance
When comparing activity to the same time last year, the picture is more varied. The South was the only region to post an increase, with pending sales rising by 2.0%.
In contrast, other regions saw notable declines:
- Midwest: -9.8%
- West: -5.1%
- Northeast: -3.6%
Yun noted that interpreting December's data can be complex due to seasonal factors like holidays and weather. “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,” he added.
December 2025 Market Snapshot
The median time a property spent on the market was 39 days, an increase from 36 days in November and 35 days in December 2024. This suggests homes are taking slightly longer to sell.
Low Inventory Remains a Key Obstacle
A persistent lack of available homes for sale is seen as a major contributor to the slowdown. According to the report, only 1.18 million homes were on the market in December, matching the lowest inventory level recorded in 2025.
“Consumers prefer seeing abundant inventory before making the major decision of purchasing a home. So, the decline in pending home sales could be a result of dampened consumer enthusiasm about buying a home when there are so few options listed for sale.”
This scarcity can create a challenging environment for potential buyers, leading some to postpone their search. The limited supply also puts upward pressure on prices, further impacting affordability.
Shifting Buyer Demographics
The data also reveals changes in who is buying homes. First-time homebuyers accounted for 29% of sales in December, a slight decrease from 30% the previous month and 31% a year prior. This could indicate that affordability and competition are making it more difficult for new entrants to the market.
Rise in Cash and Investor Purchases
While first-time buyer activity dipped, other segments grew. All-cash transactions made up 28% of sales, up from 27% in November. Additionally, individual investors or second-home buyers represented 18% of transactions, an increase from 16% in December 2024. This suggests that buyers with deeper financial resources are playing a more significant role in the current market.
Local Markets Defy National Trend
Despite the overall decline, several metropolitan areas showed remarkable strength. A number of cities posted significant year-over-year gains in pending sales, highlighting the localized nature of real estate.
The top-performing markets were concentrated in the South and Midwest. Louisville, Kentucky, led the nation with an impressive 23.8% increase in pending sales compared to the previous year.
Other cities with strong annual growth include:
- Louisville/Jefferson County, KY-IN (+23.8%)
- San Antonio–New Braunfels, TX (+13.6%)
- Virginia Beach–Chesapeake–Norfolk, VA-NC (+11.0%)
- Charlotte–Concord–Gastonia, NC-SC (+9.7%)
- Boston–Cambridge–Newton, MA-NH (+9.2%)
These local bright spots demonstrate that demand remains robust in certain areas, likely driven by factors like job growth, relative affordability, or specific local economic conditions.
Looking forward, real estate professionals are expressing cautious optimism. Survey data showed that 31% of NAR members expect an increase in buyer traffic over the next three months, a notable jump from 22% in the prior month. Similarly, 28% anticipate more sellers will enter the market, suggesting that inventory could improve in the coming months.
