Pending home sales declined 5.9 percent month-over-month in December to the lowest seasonally adjusted level on record except April 2020, according to a report from Redfin, whose records date back to 2012.
December’s decline was the largest since September 2022. On a year-over-year basis, pending sales fell 7.4 percent.
Homebuyers are skittish due to stubbornly high housing costs, layoffs, and mounting economic and political uncertainty. Mortgage rates have come down in recent months but are still above 6 percent — more than double the all-time low they fell to during the pandemic. Prices are also high. The median home sale price rose 0.5 percent year-over-year in December to $428,742—the highest December level on record. While that’s the slowest growth since June 2023, it’s still growth, and many homebuyers are priced out of the market.
Mortgage rates briefly dipped below 6 percent last week after President Trump ordered a $200 billion mortgage bond purchase. That led to a jump in mortgage demand, which may boost pending home sales in January.
“Buyers are extremely selective and still think prices are too high,” Alison Williams, a Redfin Premier real estate agent in Sacramento, Calif., said in a release. “There aren’t a ton of homes on the market, but there are enough for house hunters to feel like they can take their time. One challenge is that many buyers’ purchases are contingent on the sale of their current property, and many sellers aren’t willing to take contingent offers. This has caused a standstill in the market.”
The typical home that went under contract in December spent 60 days on the market, according to Redfin. That’s the slowest December pace in a decade and is six days higher than a year earlier.
Some buyers are also getting cold feet at the 11th hour; roughly 40,000 home purchases were canceled in December, equal to 16.3 percent of homes that went under contract that month. That’s the highest December share in records dating back to 2017.
New listings of homes for sale declined 1.4 percent month-over-month in December to the lowest seasonally adjusted level since January 2024 and fell 4.9 percent year-over-year.
Active listings fell 1.1 percent month-over-month — the largest seasonally adjusted decline since June 2023 — and rose 3.9 percent year-over-year.
Home sellers are retreating because buyers are retreating. Many prospective sellers are also in the market for their next home and may opt not to sell because buying that next home is too expensive.
“Breaking even is a win for home sellers in today’s market. Some sellers who bought in the past five years are finding themselves underwater after accounting for closing costs and commissions,” Williams said. “Buyers see dollar signs if a home is outdated, so sellers should make sure their homes are well-maintained and provide a pre-inspection. When sellers follow that advice, they have a better chance of getting their list price and selling their home quickly.”
In many cases, sellers are offering concessions and/or cutting their price to woo buyers, according to Redfin. Buyers hold the negotiating power in most markets because even though sellers have been retreating, there are still far more sellers than buyers.
The typical home that sold in December went for 1.8 percent less than its final list price, the biggest December discount since 2022. Twenty-two percent of homes sold for more than their final list price — the lowest December share since 2019.