Pending sales rise, but market still stuck in ‘low gear’
Last month, pending home sales rose 3.3% compared to October and 2.6% compared to November 2024, with the biggest year-over-year jump occurring in the South.
After last month's rise in contract signings by prospective homebuyers, it's possible that 2025 could end on a decent note following what has otherwise been a lackluster year for home sales.
In November, pending sales increased 3.3% compared to October and 2.6% year-over-year, according to the National Association of Realtors. While pending sales rose across the country, the South had the biggest year-over-year jump at 3.3%.
Market stays 'subdued': Lower mortgage rates, improving affordability and higher inventory appear to be drawing some buyers back into the market, according to Sam Williamson, senior economist at First American.
"Taken together, the regional data suggest that buyers are finally finding the payment‑to‑paycheck equation more manageable in areas where prices are cooling the most," Williamson said.
Despite the late-year rise in pending sales, it's unlikely that total existing home sales will be much higher compared to 2024. Last year's total — 4.06 million — was the lowest in 30 years. The uptick in pending sales also comes amid the housing market's slowest time of year, so the impact on overall sales numbers will be minimal.
"The housing market remains in a low gear, with both buyer and seller activity subdued," said Hannah Jones, senior economic research analyst at Realtor.com.
Building momentum for 2026? It's possible that November's rise in signed contracts could create some momentum for the housing market heading into 2026, but economists aren't expecting a quick turnaround.
Buyers, sellers and real estate professionals "are looking for a stronger 2026 housing market," said Lisa Sturtevant, chief economist at Bright MLS. "But next year will be a transitioning market and not a turnaround market."
Affordability strain persists: Housing affordability has a long way to go before returning to pre-pandemic levels, though there have been some recent improvements. First American's housing affordability index estimated that affordability was in October at its best level since mid-2022. However, that level was still over 64% below the pre-pandemic five-year average.
With mortgage rates expected to stay around current levels in early 2026 and wages expected to rise, housing supply will be key to what happens next with affordability, according to Mark Fleming, chief economist at First American.
"Looking ahead to 2026, house price trends will depend on whether demand returns faster than new listings and new construction can add supply," Fleming said.
"If demand outpaces supply growth, months' supply could tighten and the temperature of the price thermostat could rise, but if supply keeps pace with — or outpaces — sales, a cooler house price temperature may prevail."