Full Breakdown
Decline in Pending Home Sales Marks December 2025 Housing Market
1/16/2026, 12:03:07 PM
Overview of the Housing Market Decline
In December 2025, pending home sales in the United States experienced a significant decline, falling 5.9% month-over-month to the lowest seasonally adjusted level recorded since April 2020, during the onset of the COVID-19 pandemic. This downturn reflects a broader trend of economic uncertainty, high housing costs, and a cautious buyer sentiment. The typical home that sold in December spent 60 days on the market, marking the slowest pace for the month in a decade.
Factors Contributing to the Decline
The decline in pending home sales is attributed to several factors. High mortgage rates, which remain above 6%, coupled with persistent economic and political uncertainties, have made potential buyers hesitant. Although mortgage rates briefly dipped below 6% following a $200 billion mortgage bond purchase ordered by President Donald Trump, the overall market remains cautious. The median home sale price rose to $428,742, reflecting a year-over-year increase of 0.5%, which further complicates affordability for many buyers.
Market Dynamics and Seller Behavior
The housing market is characterized by a retreat of sellers, with new listings dropping 1.4% month-over-month to the lowest level since January 2024. This decline in active listings, which fell by 1.1% month-over-month, indicates that many sellers are reluctant to enter the market due to the high costs associated with purchasing a new home. Real estate agent Alison Williams noted that sellers are often seeking to break even, as many who purchased in the last five years find themselves underwater after accounting for closing costs and commissions.
Buyer Sentiment and Market Conditions
Buyer sentiment remains cautious, with many home purchases contingent on the sale of current properties, leading to a standstill in transactions. Approximately 40,000 home purchases were canceled in December, representing 16.3% of homes that went under contract, the highest share recorded for December since 2017. Buyers are increasingly selective, often believing that home prices are still too high, which has resulted in a significant number of homes selling for less than their final list price.
Regional Variations in the Housing Market
Metro-level data reveals significant regional variations in the housing market. For instance, median sale prices increased most in Detroit (8.9%), Newark, NJ (8%), and St. Louis (7.8%), while they fell in Dallas (-7.6%), Oakland, CA (-5.6%), and Austin, TX (-4.2%). Pending home sales saw the largest increases in West Palm Beach, FL (11.7%), Riverside, CA (6.7%), and Anaheim, CA (5%), while they dropped most in San Jose, CA (-34.6%) and San Francisco (-18.7%).
Official Statements & Responses
Real estate professionals emphasize the need for sellers to maintain their properties and consider pre-inspections to attract buyers. The current market dynamics favor buyers, who hold more negotiating power due to the imbalance between supply and demand.
Verbatim Quotes
“Buyers are extremely selective and still think prices are too high,” — Alison Williams, Redfin Premier Real Estate Agent
“Breaking even is a win for home sellers in today’s market.” — Alison Williams, Redfin Premier Real Estate Agent
Conclusion
The December 2025 housing market reflects a complex interplay of high prices, economic uncertainty, and cautious buyer behavior, leading to a notable decline in pending home sales. As the market adjusts, both buyers and sellers are navigating a challenging landscape marked by fluctuating mortgage rates and shifting demand dynamics.
