• Pending home sales fell 0.8% in January 2026, missing forecasts of a 2% increase and extending December's 7.4% decline.
  • Regional performance diverged sharply, with the Midwest (+5.0%) and West (+4.3%) posting gains while the Northeast (−5.7%) and South (−4.5%) declined.
  • Despite mortgage rates nearing 6% and 5.5 million more households qualifying for mortgages year-over-year, buyer activity remains restrained, with homes taking 78 days to sell on average.

Pending home sales in the U.S. dropped 0.8% in January, according to the National Association of Realtors, marking the second consecutive month of decline and defying economist expectations of a 2% rise. This weakness extends December's 7.4% slide, signaling persistent buyer hesitation even as affordability conditions improve. The data paints a picture of a housing market at a critical juncture, where lower rates and slower price growth have yet to fully translate into renewed demand.

Behind the national numbers lies a stark regional divide. While the Midwest and West saw modest month-over-month gains of 5.0% and 4.3%, respectively, the Northeast and South experienced sharp declines of 5.7% and 4.5%. On an annual basis, the South (+4.0%) and West (+0.3%) showed modest growth, but the Northeast (−8.3%) and Midwest (−3.3%) fell into negative territory. Among the 50 largest metropolitan areas, Phoenix–Mesa–Chandler, Arizona led with an 11.8% year-over-year increase, followed by Boston–Cambridge–Newton, Massachusetts-New Hampshire and Charlotte–Concord–Gastonia, North Carolina-South Carolina, both at 10.7%.

The decline is particularly notable given improving mortgage rate conditions. Rates neared 6% in January, and according to NAR Chief Economist Dr. Lawrence Yun, 5.5 million additional households could now qualify for mortgages compared to one year ago. Yet, buyer activity remains restrained—a pattern Yun attributes to the typical lag between newly qualifying households entering the market. Historical experience suggests only about 10% would activate this year, potentially adding roughly 550,000 new homebuyers, but so far, that potential remains largely untapped.

Inventory dynamics add another layer of complexity. Active listings rose 10% year-over-year in January, marking the 27th consecutive month of gains, though this growth has slowed for nine consecutive months and the inventory recovery has reversed course. Active listings remain 17.2% below pre-pandemic norms, the widest gap since spring 2025. Meanwhile, existing home sales fell more sharply, declining 8.4% month-over-month to a seasonally adjusted annual rate of 3.91 million, and 4.4% year-over-year. The median existing-home sales price was $396,800, essentially flat year-over-year at a 0.9% increase.

Pending home sales—leading indicators for future closings—showed some strength on an annual basis, rising 1.2% year-over-year, their strongest annual gain since late 2024, partially due to mortgage rates in mid-January reaching their lowest levels since 2022. But with new listings only edging up 0.7% year-over-year, the supply-demand balance remains unfavorable for buyers. NAR warns that limited inventory could soon exert upward pressure on home prices once buyer activity accelerates, potentially counteracting recent price moderation.

Buyer sentiment appears cautious, with homes taking 78 days to sell on average in January, 5 days longer than a year ago and representing the 22nd consecutive month of year-over-year increases in time-on-market. This extended selling period suggests that factors beyond rates—such as labor market uncertainty and general economic caution—are weighing on decisions. Efforts to reach NAR for additional comment on regional disparities were not immediately successful, but sources familiar with the matter indicate that local economic conditions and inventory levels are key drivers.

Looking ahead, the disconnect between qualifying households and actual market activity suggests that sustained mortgage rate stability and continued economic confidence will be essential to unlock the potential 550,000 new homebuyers NAR projects for 2026. Policymakers and industry stakeholders will need to monitor whether recent inventory gains can be sustained and whether they prove sufficient to meet the supply challenge that could otherwise reignite price pressures. Without a more robust pickup in buyer engagement, the market risks remaining in a holding pattern, balancing improved affordability against persistent hesitation.