February 19, 2026
Pending home sales fell 0.8% in January to 70.9 after having plunged 7.4% in December. Pending home sales fell sharply in December and remained at about that same low level in January. That puts it at the low end of the range it has been in throughout 2025. In January the bitter cold and snowy weather undoubtedly played a role.
The National Association of Realtors chief economist, Lawrence Yun said, “Improving affordability conditions have yet to induce more buying activity. With mortgage rates nearing 6%, an additional 5.5 million households that could not qualify for a mortgage one year ago would qualify at today’s lower rates. Most newly qualifying households do not act immediately, but based on past experience, about 10% could enter the market—potentially adding roughly 550,000 new homebuyers this year compared with last year.” He addedd that, “Unless housing supply increases, these additional potential buyers becoming active in the market could simply push up home prices. This will put increasing pressure on affordability, which is why it is critical to increase supply by building more homes. Fortunately, the House of Representatives recently passed the Housing for the 21st Century Act with strong bipartisan support, an important signal that addressing the nation’s housing shortage remains a shared priority. The legislation is a meaningful step toward expanding housing supply and removing barriers that make it harder for Americans to achieve homeownership.”
Current homeowners are still somewhat reluctant to put their homes on the market which would mean trading in their current 3.0-3.5% mortgage rate for a 6.3% rate. As a result, the supply of homes on the market for realtors to show their clients was very low for a long time It appears that the inventory of unsold homes has been gradually rising and we expect it to continue to climb throughout 2026.
We believe that a slower rate of ionflation could allow the 30-year mortgage rate to decline to 5.6% by the end of 2026. At the same time more current homeowners should be willing to put their houses on the market. As supply increases prices may decline somewhat. And with continuing job gains and rising wages, consumer income should continue to climb. These factors should boost housing affordability in the months ahead. By the end of next year we expect a median income earning family to have 30% more income than required to purchase a median priced home.. That should boost both existing and new sales as we move into the spring..
We follow pending home sales because it is a fairly good indicator of existing home sales a month or two later. Pending home sales suggest that existing home sales should remain sluggish until the spring.
This series on pending home sales is collected by the National Association of Realtors and represents contracts signed, but not yet closed, on existing home sales. Thus, it is both a leading indicator of existing home sales and housing market activity in general. Not all these contracts go to completion. The buyer may not qualify for a mortgage, the house may not appraise at a sufficiently high value, or the house may fail the buyer’s inspection. But the series is clearly indicative of changes in housing market activity.
Stephen Slifer
NumberNomics
Charleston, SC
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