Pending home sales drop sharply in December, dampening 2026 outlook

• Sales fell in all U.S. regions month-over-month and were down 3% year-over-year, with only the South showing annual gains
• Housing inventory hit 1.18 million units in December, matching the lowest level of 2025 and down 9% from November despite being 12% higher than the prior year's extremely low base
• Homes stayed on the market longer at an average of 39 days versus 35 days in December 2024, reflecting weakened consumer enthusiasm amid limited options

Summary: U.S. Pending Home Sales Plunge in December, Clouding 2026 Outlook

Key Findings:

Pending home sales dropped 9.3% month-over-month in December 2025, significantly missing analyst expectations of a slight gain, according to the National Association of Realtors (NAR). Sales also declined 3% year-over-year compared to December 2024.

Regional Performance:

All U.S. regions experienced monthly declines, with only the South showing annual gains. Days on market increased to 39 days from 35 days in December 2024, indicating slower market activity.

Market Conditions:

Housing inventory remained severely constrained at 1.18 million homes—down 9% from November and matching 2025's lowest levels. While inventory rose 12% year-over-year, this follows an extremely depressed baseline. Mortgage rates held steady around 6.25% for 30-year fixed loans during the contract-signing period, slightly below summer levels but still elevated.

Expert Analysis:

NAR Chief Economist Lawrence Yun stated the housing sector is "not out of the woods yet," noting that December's figures have "dampened the short-term outlook" after several months of encouraging trends. Yun attributed weak sales partly to limited inventory, explaining that "consumers prefer seeing abundant inventory before making the major decision of purchasing a home."

Market Implications:

The combination of stagnant mortgage rates, declining supply, and economic uncertainty continues pressuring the residential real estate market. The sharp contraction in pending sales—a forward-looking indicator—suggests weakness in closed sales for early 2026, potentially impacting homebuilders, mortgage lenders, and related sectors. The persistent inventory shortage remains a structural challenge limiting market recovery.