Pending home sales dip in December as early 2026 activity shows rebound

The National Association of Realtors (NAR) on Wednesday released its Pending Home Sales Index (PHSI) for December, which shows that the housing market ended 2025 on a downturn. 

“The housing sector is not out of the woods yet,” Lawrence Yun, NAR’s chief economist, said in a statement. “After several months of encouraging signs in pending contracts and closed sales, the December new contract figures have dampened the short-term outlook.”

The PHSI fell 9.3% from a month prior to an index reading of 71.8. This represents a 3% decline on an annual basis. An index reading of 100 is equal to the level of contract activity in 2001.

According to Yun, interpreting in-person home search activity for December poses some unique challenges with people traveling and taking time off for the holidays, as well as the challenges posed by winter weather in some markets.

“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,” Yun said.

HousingWire Lead Analyst Logan Mohtashami also said that he would not read too much into this pending home sales report.

“Whenever you have the December existing home sales report at a yearly high, you’re prone to the pending data getting hit due to the last two weeks of the year and the first week due to the holidays,” Mohtashami said. “Our weekly tracker data has shown growth in January which takes about 30-60 days to hit the sales report, and purchase apps have had their best start in years.”

All four regions of the U.S. posted monthly declines, with the Midwest falling 14.9% for a PHSI reading of 67.0, the West (55.3) dropping 13.3%, the Northeast (60.9) declining 11% and the South (91.0) falling 4%.

Looking ahead, data from NAR’s Realtors’ Confidence Index showed that 31% of NAR members expect to see an increase in buyer traffic over the next three months, up from 22% in November and 27% in December 2024. On the other side of the transaction, 28% of members expect an increase in seller traffic, up from 18% a month ago and 27% a year ago.

“Lower mortgage rates are helping to improve affordability in the year ahead, but economic uncertainty is holding some prospective buyers back,” Lisa Sturtevant, chief economist at Bright MLS, said in a statement.

“Buyers looking to get into the market this year will generally find more inventory and greater opportunities to negotiate on price and concessions. Sellers wanting a quick sale will need to price appropriately to entice economically anxious buyers.”

NAR’s data also showed that the median days on market in December rose three days from a month prior and four days from a year ago to 39 days. Additionally, the Realtors’ Confidence Index survey found that 29% of sales were by first-time buyers, down from 30% a month ago and 31% in December 2024.

As a result, it’s unsurprising that the share of all-cash transactions rose to 28%, up from 27% a month earlier. The report also noted that 18% of transactions were to individual investors or second-home buyers, the same as a month ago, but up from 16% a year prior. The share of distressed sales remained unchanged at 2%.

“For now, we remain cautiously optimistic that the recent pullback in rates and cooling price growth will support a more constructive year ahead for home buyers — driven more by ‘life happens’ events such as job changes, marriages, and growing families than by further declines in mortgage rates,” Sam Williamson, senior economist at First American, said in a statement.