Pending home sales across the United States plummeted to unprecedented levels in January as a result of elevated mortgage rates and soaring home prices. Adverse weather conditions might have also played a role in deterring potential buyers during that month.
The National Association of Realtors (NAR) reported a decrease in its Pending Home Sales Index by 4.6% to 70.6 for the month of January, reflecting a decline based on contract signings. In comparison to the previous year, pending transactions dropped by 5.2%.
Regionally, the Midwest, South, and West all experienced month-over-month declines, with the South showing the most significant downturn. Despite encountering cold and windy weather conditions, sales increased slightly in the Northeast.
“It remains unclear if the coldest January in over two decades had an impact on buyer activity, and if improved weather conditions will lead to increased sales in the following months,” stated NAR Chief Economist Lawrence Yun. “Nonetheless, it is evident that high home prices and increased mortgage rates continue to challenge affordability.”
During January, mortgage rates ranged from 6.91% to 7.04%.
According to NAR, sales of previously owned homes in the U.S. decreased by 4.9% from December, reaching a seasonally adjusted annual rate of 4.08 million units. Sales rose by 2% when compared to the same month last year, making it the fourth consecutive annual increase. Despite this, the latest sales figures fell short of economists’ predictions, which anticipated a rate of 4.11 million units.
Home prices have been on an upward trajectory for 19 months, with the national median sales price increasing by 4.8% in January compared to the previous year, reaching $396,900.
The U.S. housing market downturn can be traced back to 2022 when mortgage rates began climbing from pandemic-period lows. That year, the sale of previously owned homes dropped to a near 30-year low.
The stock prices of publicly traded home builders have taken a hit this year, experiencing further declines recently. Concerns over potential tariffs and mass deportations under the Trump administration have caused apprehension in the sector, particularly regarding increased costs for lumber, metals, and labor.
As it stands, Toll Brothers’ stock has decreased by 11% this year. D.R. Horton and Lennar experienced declines between 7% and 9%, while Beazer Homes has seen a drop nearing 17% in 2025.
