'The housing sector is still facing challenges': December saw a drop in contract signings

Sharp Decline in Home Contract Signings Signals Ongoing Housing Market Challenges

Between November and December, the number of newly signed home contracts dropped by 9.3%, even as mortgage rates eased. This significant decrease highlights the continued vulnerability of the housing market’s recovery.

According to data released by the National Association of Realtors, every region in the United States experienced a decline in contract signings last month. The Midwest saw the steepest fall, with a 14.9% decrease. On a national scale, contract signings were 3% lower compared to the same period last year.

Lawrence Yun, chief economist at NAR, commented, “The housing market is still facing headwinds. While previous months showed some positive momentum in pending and closed sales, the latest figures for December have cast doubt on the near-term outlook.”

Earlier reports indicated that falling mortgage rates were motivating more buyers to re-enter the market. However, the disappointing December numbers may slow that momentum. Since homes are typically under contract one to two months before closing, contract signings serve as a leading indicator for upcoming sales trends.

Both 2024 and 2025 are now tied as the slowest years for home sales in the past thirty years. Market analysts are hopeful that the current year could see improvement, as declining mortgage rates and a slowdown in home price increases may attract more buyers and sellers.

Winter months usually bring a reduction in available homes, and December’s inventory of 1.18 million properties matched last year’s lowest point. Yun suggested that the decrease in contract signings could be attributed to limited choices for buyers.

“We’ll be closely monitoring the data in the months ahead to see if this dip in contract signings is just a temporary blip or the beginning of a new pattern,” Yun added.

About the Author

Claire Boston is a Senior Reporter at Yahoo Finance, specializing in coverage of housing, mortgages, and home insurance.

Stay Informed

• Subscribe to the Mind Your Money newsletter
• Find the latest personal finance updates on investing, debt management, home buying, retirement, and more
• Get the most recent financial and business news from Yahoo Finance