Pending home sales are on the rise, which could be good news for the new year

There’s a spark of good news for the housing market as 2025 draws to a close: Pending home sales shot up by more than 3% in November, after rising nearly 2.5% the month before. The National Association of Realtors reports those numbers, which count signed contracts that are expected to close over the next four to six weeks.

Existing home sales have also been trending higher for the past three months, and the growth of home prices has been moderating — just 1.2% year-over-year in November.

So, affordability is improving, there's a little bit more inventory available for sale, mortgage rates have trended lower over the year. For a change, the housing news is not all gloom and doom.

“A slight surge in pending home sales — it is a promising sign, the best increase on a seasonal basis since 2023,” said Guy Cecala at Inside Mortgage Finance.

Especially because the market since then looked like a “housing market stuck in the mud,” said Cecala.

Homes and mortgages haven’t seemed affordable for most would-be homebuyers for a while, said Edward Pinto at the American Enterprise Institute. He points out, since 2019, “House prices went up something like 30 or 40%, and wage growth was something like 11%. And so, we ended up with housing becoming much less affordable,” he said.

But by the end of this year, “House-price appreciation, adjusting for consumer prices, [was] actually down 0.5% to 1%,” Pinto said.

Plus, he expects more homes to come onto the market, putting the brakes on future home-price increases. 

There’s another central figure in the affordability equation: mortgage rates. The 30-year-fixed rate peaked near 8% two years ago. Since mid-October, it’s been hovering around 6.2%, said Cecala.

“Mortgage rates are moving in the right direction, even if a lot slower than any of us anticipated,” he said.

Cecala is expecting two to three more interest rate cuts from the Federal Reserve in 2026, which he thinks will bring mortgage rates down further. 

“I think we need to get under 6% before we see any meaningful increase in home-buying activity,” he said.

That’s not going to jump-start the housing market overnight, said Bankrate senior analyst Ted Rossman, but, “Further downward movement will help. We’re not going back to the threes or fours anytime soon. But if we can get into the upper fives, I feel like that is a psychological barrier for some people,” he said.

That could prompt some homeowners with low mortgage rates to finally be ready to sell, and induce more buyers to take the plunge.