Pending home sales dropped to their lowest level ever to start 2025, as the index fell to 70.6 in January, a 4.6% decline from December, according to the latest data from National Association of Realtors.
- This marks the lowest recorded level, though a similar dip last year was later revised upward.
By The Numbers: The South experienced the steepest decline, plunging 9.2% to an index level of 81.0 in January. The Midwest and West also saw declines of 2.0% and 1.2%, respectively.
- On the flip side, the Northeast was the only region to see an increase, with pending home sales rising 0.3% from December.
Affordability: Nationally, housing affordability worsened in January as mortgage rates ranged from 6.91% to 7.04%. Compared to one year ago, the monthly mortgage payment on a $300,000 home increased by $50 to $1,590, further straining potential buyers.
What They’re Saying: Lawrence Yun, Chief Economist at the National Association of Realtors (NAR), suggested that weather may have played a role in the sluggish sales. “It is unclear if the coldest January in 25 years contributed to fewer buyers in the market, and if so, expect greater sales activity in upcoming months,” he noted. “However, it’s evident that elevated home prices and higher mortgage rates strained affordability.”
Bottom Line: February will be a critical month in determining whether this decline in pending home sales was due to a true drop in buyer demand or simply a result of harsh winter conditions.
