October 29, 2025
Pending home sales were unchanged in September at 74.8 after hving jumped 4.2% in August. Pending home sales have been fairly steady for the past couple of years but should begin to climb in the months ahead.
The National Association of Realtors chief economist, Lawrence Yun said, “Contract signings matched the second-strongest pace of the year. However, signings have yet to fully reach the level needed for a healthy market despite mortgage rates reaching a one-year low. A record-high stock market and growing housing wealth in September were not enough to offset a likely softening job market.”
Current homeowners are 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 remains low. However, housing inventory has been rising steadily in recent months as potential sellers appear to have postponed their next home purchase for as long as they can.
With the Fed likely to cut rates a couple of times between now and yearend the 30-year mortgage rate may edge down to 6.1% by yearend and 5.8% 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. A median-income earning family today has almost exactly the income required to purchase a median-priced home. By the end of this year we expect them to have 11% more income than required. That should boost both existing and new sales as we move into the new year..
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 rise slightly in the months ahead..
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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