December pending contracts fell sharply, but leading economists and analysts forecast improving affordability and rising sales in 2026 — with disagreement on how strong the recovery will be.
• Pending contracts fell 9.3% month‑to‑month in December 2025 • Redfin expects mortgage rates ~6.3%, prices +1%, sales +3% in 2026 • NAR economists forecast improving affordability and regional rebounds
Real‑time market data perspective: December pending‑sale figures and month‑end inventory counts point to near‑term softness and thin choices for buyers, underscoring seasonal and local volatility. Forecaster/analyst perspective: Redfin and several economists expect a gradual recovery in 2026 driven by wage growth outpacing home‑price growth, modest mortgage‑rate declines, and a slow normalization of sales — but they differ on how quickly and how broadly that recovery will materialize. Buyer/seller perspective: Buyers may see some easing in affordability and more options in some regions, but younger and first‑time buyers will still face affordability challenges; sellers with substantial equity may remain patient, limiting rapid supply increases.
Recent data show a notable near-term softening in contract activity: the National Association of REALTORS® (NAR) reported pending home sales fell 9.3% month‑over‑month and 3.0% year‑over‑year in December 2025, with declines across all four U.S. regions and only 1.18 million homes on the market in December (matching the lowest 2025 inventory level); the REALTORS® Confidence Index also showed a 39‑day median time on market and other shifts in buyer composition. [1] Analysts and forecasters, however, expect market conditions to improve in 2026. Redfin projects a gradual recovery — mortgage rates averaging roughly 6.3% for the year, median home-sale prices up about 1% year‑over‑year, and existing‑home sales rising about 3% as wages outpace price growth. Redfin also flags rising rents, climate-driven local moves, and regional winners and losers. [2] Separately, NAR’s roundup of leading housing economists presents stronger and varied forecasts: NAR Chief Economist Lawrence Yun expects a sizable rebound in 2026 (forecasting roughly a 14% increase in home sales and modest price growth of about 2–3%), while other experts highlight modest gains in new construction (around 1% single‑family building growth) and improving affordability that could lure back first‑time buyers. [3] Putting these pieces together shows a market in transition: December’s drop in pending contracts may reflect seasonal/winter effects and low listing counts that constrained choices in that month, even as other measures (and some economists) point to rising inventory versus year‑ago levels and easing financing costs that should support more transactions in 2026. Redfin emphasizes a slow, multi‑year “Great Housing Reset” driven by wage growth, smaller price increases, and only gradual rate declines, while NAR economists stress both the potential for a meaningful rebound in sales and persistent supply constraints tied to zoning and construction. [1][2][3] The takeaway is cautious: most sources anticipate improving affordability and more sales in 2026, but they differ on magnitude and timing. Near‑term data warn of volatility (December softness and local variation), while upside depends on mortgage‑rate moves, labor‑market stability, and the pace of new construction and listing activity — meaning outcomes will likely vary substantially by region and buyer cohort.
Controversy
Forecasts diverge on the strength of a 2026 sales rebound and price changes: Redfin projects a modest 3% rise in existing‑home sales and ~1% price growth in 2026, while NAR Chief Economist Lawrence Yun (cited in NAR’s economist roundup) projects a much larger sales increase (~14%) and somewhat higher price gains (2–3%). [2][3] There is also an apparent snapshot tension between NAR’s December report noting very low December inventory (1.18 million homes) and commentary in the NAR economist roundup that inventory is about 20% higher than a year ago — a difference that reflects timing and measurement but appears contradictory at first glance. [1][3]