U.S. Housing Market Cools as Pending Sales See Biggest Drop in a Year

SEATTLE, WA – December 18, 2025 – The U.S. housing market is showing significant signs of a holiday season slowdown, with pending home sales plummeting by the largest margin in nearly a year, according to new data. A report from real estate brokerage Redfin reveals that for the four weeks ending December 14, pending sales dropped 5.8% compared to the same period last year, signaling a decisive chill as 2025 draws to a close.

This cooling trend is a direct response to a cocktail of economic pressures that are squeezing potential homebuyers. Stubbornly high mortgage rates, which have hovered above 6%, coupled with still-rising sale prices, have pushed affordability to a breaking point for many. Compounding the issue are broader economic anxieties, including signals of weakness in the labor market that have left many would-be buyers concerned about job security and hesitant to commit to a major long-term purchase.

The Affordability Squeeze and Buyer Hesitation

The primary driver behind the market's deceleration remains the high cost of financing a home. While the daily average 30-year fixed mortgage rate has eased slightly to 6.27% as of December 17, down from its recent peaks, it remains a formidable barrier. The median monthly mortgage payment, at $2,412, is still a substantial financial burden, even though it represents a 1.7% decrease year-over-year due to slightly lower rates compared to late 2024.

This persistent affordability challenge has led to a marked decline in homebuying activity. The Redfin Homebuyer Demand Index, a measure of tours and other services, is down about 5% from a month earlier. Similarly, Google searches for “homes for sale” have fallen 9% in the same period. Homes that do sell are taking longer to find a buyer, with the median days on market now at 52, a full week longer than a year ago. This slowdown gives buyers more leverage, with the average home selling for 98.1% of its list price, down from 98.4% last year, and only 21.6% of homes selling above their asking price.

Broader economic sentiment is also playing a crucial role. Recent data on consumer confidence shows persistent concerns regarding inflation and personal finances, which directly impacts the willingness to undertake large investments. While some indicators point to job growth, other analyses suggest that colder employment prospects are keeping many potential buyers on the sidelines, waiting for clearer economic signals before entering the market.

A Nationally Divided Market

While the national figures paint a picture of a cooling market, a closer look at metropolitan data reveals a deeply fractured landscape. The slowdown is not uniform, with some regions experiencing a deep freeze while others show surprising resilience. According to the Redfin report, pending sales declined in 44 of the 50 most populous U.S. metros.

The most dramatic downturns are concentrated in high-cost tech hubs and certain southern markets. San Jose, California, saw a staggering 35.1% year-over-year drop in pending sales, followed by Houston, Texas (-20.9%), and Oakland, California (-17.6%). This aligns with broader trends seen across the expensive West region, where high prices have made the impact of elevated mortgage rates particularly acute. Other data from organizations like the National Association of Realtors (NAR) has consistently pointed to the West as the region with the most significant pullbacks in contract signings.

In stark contrast, a handful of markets are bucking the trend. South Florida appears to be a notable hotspot, with West Palm Beach posting a 10.7% increase in pending sales and Miami seeing a 6.4% rise. These areas, along with metros in the Northeast and Midwest, continue to benefit from relatively tighter inventory and, in some cases, an influx of buyers from more expensive parts of the country. CoreLogic data has also highlighted Miami for its strong annual price gains, suggesting that demand in certain affordable or desirable refuge markets remains robust despite the national headwinds.

Sellers Retreat as Buyers Gain an Edge

The widespread buyer hesitancy is having a ripple effect on the supply side of the equation. Potential sellers are growing cautious, leading to a 3.1% year-over-year decline in new listings—the biggest drop recorded in 2025. Many homeowners who might otherwise sell are reluctant to list their properties in a market that is increasingly favoring buyers. Instead, they are opting to wait until the new year to see if demand improves.

This dynamic is creating a market where inventory is growing not because of a flood of new listings, but because existing homes are lingering on the market longer. The total number of homes for sale is up a modest 4.2%, the smallest increase since early 2024. Months of supply now stands at 4.5 months, inching closer to the 5-to-6-month range that is typically considered a balanced market, a significant shift from the intense seller's market of recent years.

For sellers who do choose to list, the environment demands a new strategy. “My advice to sellers is to carefully consider the buyer’s perspective: If a buyer is taking on a high monthly payment, they want the house to be near perfect and the sale price to be fair,” said Tracy Edwards, a Redfin Premier agent in Raleigh, NC, in the report. She advises sellers to be open to negotiations on repairs and concessions and to be realistic about pricing, noting, “It’s better to sell a home quickly than let it linger on the market.” This sentiment is echoed by market analysts, who stress the importance of strategic pricing in a competitive environment where buyers have more options and time to choose.