Pending home sales experienced a decline of 5.5% in December, following four months of consecutive increases, as reported by the National Association of REALTORS. The downturn affected all four U.S. regions, with the West facing the most significant decrease. On an annual basis, contract signings also fell across all regions, with the Midwest experiencing the largest reduction.

The Pending Home Sales Index (PHSI), which serves as a forward-looking indicator based on contract signings, decreased by 5.5% to 74.2 in December. Compared to the previous year, pending transactions were down by 5.0%. The index had reached its lowest point in July 2024 at 70.2.

"After four straight months of gains in contract signings, one step back is not welcome news, but it is not entirely surprising," stated NAR Chief Economist Lawrence Yun. "Economic data never moves in a straight line. High mortgage rates have not significantly dented housing demand due to greater numbers of cash transactions."

Regionally, the Northeast PHSI dropped by 8.1% from November to 62.3 and was down by 1.3% from December 2023. The Midwest saw a decrease of 4.9%, reaching an index level of 74.3 for December and down by 6.9% compared to last year.

In the South, the PHSI declined by 2.7% to 90.6 for December and was down by 5.1% from a year earlier. The West recorded a significant drop of 10.3% from November to an index level of 57.7 and decreased by 5.1% compared to December last year.

"Contract activity fell more sharply in the high-priced regions of the Northeast and West, where elevated mortgage rates have appreciably cut affordability," Yun explained further, adding that job gains tend to have more impact in affordable regions and questioning whether unusual winter precipitation affected purchase timing.

The National Association of REALTORS remains engaged across residential and commercial real estate sectors as America's largest trade association.