US Pending Home Sales Plummet 9.3% in December, Marking Steepest Drop Since April 2020

Sharp Decline in Contract Signings

Pending home sales in the United States sharply fell by 9.3% in December, marking the largest month-over-month decrease since April 2020. Data released by the National Association of Realtors (NAR) on Wednesday, January 21, 2026, indicated that the index of contract signings dropped to 71.8. This significant downturn follows a period of four consecutive months of gains, signaling renewed pressure on the U.S. housing market.

NAR Chief Economist Lawrence Yun commented on the figures, stating, 'The housing sector is not out of the woods yet.' He added, 'After several months of encouraging signs in pending contracts and closed sales, the December new contract figures have dampened the short-term outlook.'

Regional Impact and Inventory Challenges

The decline in pending home sales was widespread, affecting all four major U.S. regions. The Midwest experienced the most substantial drop, plunging by 14.9% month-over-month. The West saw a decrease of 13.3%, while the Northeast fell by 11.0%. The South recorded a 4.0% decline in contract signings.

On a year-over-year basis, pending home sales were down 3.0%. A key factor contributing to the December slump, according to Yun, was the persistent low inventory. He noted that while closing activity increased in December, new listings did not keep pace, leading to a decrease in available homes. 'Consumers prefer seeing abundant inventory before making the major decision of purchasing a home,' Yun explained, suggesting that the decline could stem from 'dampened consumer enthusiasm about buying a home when there are so few options listed for sale.' In December, the inventory of previously owned homes stood at approximately 1.18 million, matching the lowest level recorded in 2025.

Outlook Amidst Economic Factors

The unexpected drop in December's pending home sales has raised questions about the immediate future of the housing market. Economists had generally anticipated a modest increase, making the reported 9.3% fall particularly notable. The market continues to grapple with factors such as elevated mortgage rates, which remained above 6%, and a shortage of entry-level housing options.

Yun emphasized that it remains unclear whether the December figures represent a 'one-month aberration or the start of an underlying trend.' While housing activity typically slows during winter months, and seasonal adjustments are made, the magnitude of this decline is significant. Looking ahead, there is some potential for activity to pick up as mortgage rates have begun the new year at some of their lowest levels since 2022, and home price growth has slowed. However, the recovery largely hinges on an improvement in available inventory.