Pending Sales FREEFALL: Unprecedented 9.3% Drop

A 'For Sale' sign in front of a house — PENDING SALES FREEFALL

December’s sharp drop in pending home sales signals a challenging outlook for 2026, stirring concerns among conservatives about the economic impact of low housing inventory.

Story Highlights

Pending home sales fell 9.3% in December 2025, reaching historic lows.
All U.S. regions experienced declines, with the Midwest hit hardest.
Low inventory levels are cooling buyer enthusiasm despite earlier gains.
The housing market’s future remains uncertain without increased supply.

Pending Sales Take a Sharp Turn

The National Association of Realtors (NAR) released a report indicating a 9.3% month-over-month drop in pending home sales for December 2025. This decrease marks a significant shift from the previous month’s 3.3% rise, reflecting a universal decline across all regions, particularly in the Midwest.

The drop, which brings the Pending Home Sales Index to 71.8, a level not seen since April 2020, underscores the challenges faced by the housing market.

U.S. pending home sales fell in December to their lowest since last July … nearing an all-time low (again) pic.twitter.com/nYEHPJJTvw

— Kevin Gordon (@KevRGordon) January 21, 2026

Current data suggests that the housing market’s recovery has stalled, largely due to low inventory levels. Despite the recent drop in mortgage rates, which had initially boosted affordability and sales, the lack of available homes is causing potential buyers to hesitate.

The inventory of homes for sale fell to 1.18 million, the lowest in 2025, indicating a tightening market that continues to challenge both buyers and sellers.

Regional Discrepancies and Economic Impacts

Regional discrepancies highlight the uneven impact of the slowdown. The Midwest experienced the most significant decline at 14.9%, followed by the West at 13.3%, the Northeast at 11.0%, and the South at 4.0%. While the South showed some resilience with a year-over-year gain of 2.0%, the overall national picture remains concerning.

This downturn could delay homeownership and affect economic growth, as a slower housing market may hinder related industries such as construction and real estate services.

The implications of this downturn extend beyond the immediate housing market. With fewer options available, potential buyers face longer waits, averaging 39 days on the market.

First-time buyers, who make up 29% of the market, are particularly affected, as they face increased competition for the limited number of homes available. This scenario underscores the need for policy measures to address housing supply issues and ensure a robust, stable market.

Expert Opinions and Future Outlook

Experts like Lawrence Yun, NAR’s Chief Economist, emphasize that the housing sector is not yet out of the woods, citing low inventory as a major concern.

Economists such as Sam Williamson of First American Financial Corp. and Lisa Sturtevant of Bright MLS echo these sentiments, noting that the current pullback signals a cautious approach among buyers amid economic uncertainties. While there is potential for improvement if inventory levels rise, the short-term outlook remains dampened.

As we look towards 2026, the housing market’s trajectory will depend heavily on the ability to increase home supply. Without significant changes, the conservative values of individual liberty and economic opportunity may be further challenged by a sluggish market, underscoring the need to address these issues promptly.