Pending Home Sales Plunge: Mortgage Rates & Low Inventory Blamed

December saw a significant downturn in the housing market, as pending home sales experienced a sharp decline. The National Association of Realtors reported a 9.3% drop in signed contracts for existing homes compared to November, defying analyst expectations of a modest increase.

Deteriorating Market Conditions

The decrease in pending sales translates to a 3% decline year-over-year, compared to December 2024. Lawrence Yun, chief economist for the Realtors, stated, “The housing sector is not out of the woods yet,” adding that recent figures have “dampened the short-term outlook.”

Did You Know? Homes stayed on the market longer in December 2026, averaging 39 days compared to 35 days in December 2025.

The slowdown was widespread, with sales falling in all U.S. Regions during the month. The South was the only region to see an annual increase in sales.

Inventory and Mortgage Rates

Contributing factors to the decline include stagnant mortgage rates and a continuing shortage of homes for sale. The average rate for a 30-year fixed mortgage hovered around 6.25% in December, a slight decrease from the summer months, but still a barrier for many potential buyers.

Expert Insight: The combination of limited housing supply and relatively stable, yet still elevated, mortgage rates creates a challenging environment for prospective homebuyers, potentially leading to further market stagnation.

Available housing inventory decreased by 9% from November, reaching 1.18 million homes – the lowest level of 2025. While inventory was 12% higher than a year ago, this increase is from a historically low base.

Yun explained that “Consumers prefer seeing abundant inventory before making the major decision of purchasing a home,” suggesting that the lack of options may be discouraging potential buyers.

Looking Ahead

If mortgage rates remain stable or decrease slightly, a modest increase in buyer activity is possible. However, a significant rebound in sales is unlikely without a substantial increase in housing inventory. Conversely, if economic uncertainty increases or mortgage rates rise, further declines in pending home sales could be anticipated. The market could also see continued stagnation if current conditions persist.

Frequently Asked Questions

What happened with pending home sales in December?

Pending home sales dropped 9.3% in December compared to November, and were 3% lower than in December 2024.

What factors contributed to the decline?

Stagnant mortgage rates, falling housing supply, and ongoing economic uncertainty all weighed on homebuyers in December.

How long are homes staying on the market?

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

How might changes in housing inventory impact the market in the coming months?