Pending home sales retracted 5.5% in December – following four consecutive months of increases – according to the National Association of REALTORS®. All four U.S. regions experienced month-over-month losses in transactions, with the most significant fall in the West. Year-over-year, contract signings reduced in all four U.S. regions, with the Midwest seeing the largest decrease.
The Pending Home Sales Index (PHSI) – a forward-looking indicator of home sales based on contract signings – slid 5.5% to 74.2 in December. Year-over-year, pending transactions declined 5.0%. Last year’s cyclical low point occurred in July 2024 at 70.2. An index of 100 is equal to the level of contract activity in 2001.
“After four straight months of gains in contract signings, one step back is not welcome news, but it is not entirely surprising,” said NAR Chief Economist Lawrence Yun. “Economic data never moves in a straight line. High mortgage rates have not significantly dented housing demand due to greater numbers of cash transactions.”
Pending Home Sales Regional Breakdown
The Northeast PHSI fell 8.1% from last month to 62.3, down 1.3% from December 2023. The Midwest index shrunk 4.9% to 74.3 in December, down 6.9% from the previous year.
The South PHSI slipped 2.7% to 90.6 in December, down 5.1% from a year ago. The West index tumbled by 10.3% from the prior month to 57.7, down 5.1% from December 2023.
“Contract activity fell more sharply in the high-priced regions of the Northeast and West, where elevated mortgage rates have appreciably cut affordability,” said Yun. “Job gains tend to have greater impact in more affordable regions. It is unclear if heavier-than-usual winter precipitation impacted the timing of purchases.”
About the National Association of REALTORS®
As America’s largest trade association, the National Association of REALTORS® is involved in all aspects of residential and commercial real estate. The term REALTOR® is a registered collective membership mark that identifies a real estate professional who is a member of the National Association of REALTORS® and subscribes to its strict Code of Ethics. For free consumer guides about navigating the homebuying and selling transaction processes – from written buyer agreements to negotiating compensation – visit facts.realtor.