Do Pending Sales Point To A Weak Housing Market For 2025?

Pending home sales rose in February as rates stabilized, but data suggests a rough year for the housing market could be ahead.

NAR’s Pending Home Sales Index increased 2% from January to a reading of 72. An index of 100 equals the level of contract activity in 2001 when NAR began tracking this data.

Year-over-year, sales were down 3.6%.

The Northeast and West clocked month-over-month losses, while the Midwest and South experienced gains, particularly in the South. All regions saw annual declines.

Analysts have noted that, while the month-over-month gain is positive, it’s a fairly small increase, especially paired with an annual decline.

2024 was the weakest year for the housing market since 1995. This data suggests 2025 could be even worse.

“Despite the modest monthly increase, contract signings remain well below normal historical levels,” said NAR Chief Economist Lawrence Yun. “A meaningful decline in mortgage rates would help both demand and supply – demand by boosting affordability, and supply by lessening the power of the mortgage rate lock-in effect.”

Rates have stayed firm in the mid-6% range recently. Yun noted that rates could decline if the Federal Reserve’s prediction of slower economic growth plays out.

“But the current high national debt will prevent mortgage rates from falling drastically – and certainly not to the 4%-to-5% range seen during President Trump’s first term,” he added.