Pending Home Sales Fell 5.8% in Early December

Min 1: San Jose Led Decline at 35% Drop

The West Coast tech hubs got hammered. San Jose pending sales plummeted 35.1% year-over-year during the four weeks ending December 14, according to Redfin data. Houston followed with a 20.9% drop while Oakland fell 17.6%. Only six of the 50 most populous metros saw year-over-year gains in pending sales—the rest all posted declines. Homes taking 52 days to go under contract represents a week longer than last year at the same time, signaling buyer hesitation extends beyond just price concerns. The decline happened despite mortgage rates averaging around 6.6% for 2025 compared to 6.7% last year—technically an improvement but not enough to bring buyers off the fence.

Min 2: Rate Lock-In Keeps Would-Be Sellers Frozen

Mortgage rate lock-in remains the major barrier keeping inventory tight. Current homeowners sitting on mortgages in the 3% range would pay about $1,000 more per month for a similar home today—a 73% increase in monthly payment according to Churchill Mortgage analysis. This dynamic continues keeping would-be sellers on the sidelines and limiting inventory. Realtor.com's 2026 Housing Forecast expects mortgage rates to average 6.3% next year, offering slightly more relief than 2025 but still nowhere near the sub-4% rates that created the lock-in effect. An investor who targets frustrated sellers approaching the one-year mark without sales can negotiate 8% to 12% discounts below current comps, generating wholesale assignment fees of $8,000 to $15,000 per transaction while providing liquidity to sellers facing continued carrying costs.

Min 3: Buyer Agent Commissions Rose Despite New NAR Rules

Here's a twist nobody saw coming. Buyer's agent commissions inched up to 2.42% nationwide since the new NAR rules took effect—slower home sales give buyers more leverage to negotiate higher compensation for their agents according to market tracking data. The settlement that eliminated mandatory buyer agent commission offers from MLS listings was supposed to compress these fees. Instead, in a market where buyers hold the cards, they're demanding their agents get paid more for navigating increasingly difficult transactions. The unintended consequence creates additional cost pressure on sellers already dealing with stale inventory.

Min 4: Sales Increased This Time Last Year Creating Tough Comp

Another reason pending sales declined year-over-year: sales actually increased around this time last year after uncertainty leading up to the 2024 election cleared, according to Redfin analysis. The tough comparison makes current numbers look worse than they might otherwise. But the underlying weakness remains real—buyers facing elevated mortgage rates above 6%, rising home prices, and job market uncertainty sit on the sidelines rather than commit to what remains the largest purchase most Americans ever make. Economic Optimism Index rose from 43.9 to 47.9 in December per Churchill Mortgage tracking, reflecting improving sentiment even though the overall reading remains slightly pessimistic as people process mixed signals.

Min 5: NAR November Data Showed Opposite Trend

The weekly December data contrasts with NAR's monthly November report showing pending home sales jumped 3.3% month-over-month and 2.6% year-over-year. The divergence highlights how quickly conditions shift—November's temporary improvement from October's weakness didn't carry through into early December as holiday season and end-of-year uncertainty froze buyers. 22% of NAR members expect an increase in buyer traffic over the next three months, up from 17% in October but down from 24% one year ago, suggesting modest optimism tempered by reality of current market conditions. 18% expect an increase in seller traffic, up from 16% last month.

The Takeaway

Pending home sales fell 5.8% year-over-year during the four weeks ending December 14—the biggest decline since start of 2025—with San Jose down 35%, Houston down 21%, and Oakland down 18% as only six of 50 largest metros saw gains. Homes taking 52 days to go under contract, up a week from last year, reflects buyer hesitation amid mortgage rates above 6% and prices still rising while mortgage rate lock-in keeps would-be sellers frozen facing $1,000 higher monthly payments for similar homes. Buyer agent commissions rose to 2.42% nationwide despite new NAR rules as slower sales give buyers leverage to negotiate higher compensation, creating additional cost pressure on sellers. Tough year-over-year comparison exists because sales increased around this time last year after 2024 election uncertainty cleared, though Economic Optimism Index rose from 43.9 to 47.9 in December showing improving sentiment. Investors targeting frustrated sellers approaching one-year mark without sales negotiate 8% to 12% discounts generating $8,000 to $15,000 wholesale assignment fees while NAR members show modest optimism with 22% expecting buyer traffic increases next three months.