In recent years, the U.S. housing market has faced headwinds: rising mortgage rates, affordability constraints, and cautious buyers. The National Association of REALTORS® (NAR) has long tracked pending home sales (i.e. contract signings) as a key indicator of buyer demand, and signs from 2025 suggest we may be in the early phases of stabilization — or even a modest rebound.
Below is a fresh look at where contract signings stand in 2025, what’s influencing them, and what that means for buyers, sellers, and real estate professionals.
What Happened Before: A Quick Recap
Back in 2022, contract signings saw sharp year‑over‑year declines — in one instance, falling nearly 20% in July compared to 2021. The market was reacting to significantly higher mortgage rates and pressured affordability. (Original NAR analysis: “pending home sales down nearly 20 % year over year”)
The NAR chief economist at the time argued that contracting declines and softer rate movements might mean the market was nearing a bottom.
Since then, many real estate observers have watched closely: Has the bottom been reached? Are we looking at a slow crawl upward — or continued volatility?
What 2025 Is Telling Us: Indicators, Data & Trends
While we don’t yet have a full year’s data, several signs suggest contract signings are no longer in freefall. Below are key observations and indicators as of mid‑2025:
1. Stabilized Mortgage Rates (Relative to 2022–2023 Highs)
Mortgage interest rates peaked in recent cycles, putting heavy pressure on buyer budgets. But into 2025, rates have moderated somewhat, which has helped ease the burden on buyers. The “ceiling” effect means further large increases are less likely, providing more confidence to some hesitant buyers.
2. Affordability Still a Constraint — but Easing Slightly
Home prices remain high in many markets, but some cooling has occurred. Meanwhile, wage gains and inflation moderation are nudging affordability back into more workable ranges in certain regions. That said, affordability is still tighter than pre‑pandemic norms.
3. Regional and Price‑Segment Divergence
High-end, luxury homes still face slower demand and longer listing times, whereas mid‑price and entry‑level homes are experiencing more resilience. In many metro areas, modest single-family homes and affordable condos are showing stronger absorption than premium properties.
4. Growing Inventory in Some Markets
Some markets are seeing inventory increases — especially in higher price bands. That gives buyers more choices, but also pushes sellers to price and condition more competitively.
5. Indicator of Contract Signings
Preliminary reports in 2025 show that contract activity is flat to slightly up in many markets compared to 2024’s lows. That suggests we may have passed the trough of contract declines. Some months are showing small positive year-over-year gains in pending sales in key metro areas.
What It Means for Buyers (2025 Edition)
If you’re a buyer evaluating timing, here’s what the 2025 landscape suggests:
✅ More Negotiating Power
With more listings relative to buyers (especially in upper price tiers), buyers may see better price concessions, more seller credits, or more favorable contingencies.
✅ Less Risk of Further Sharp Declines
While nothing is guaranteed, many indicators point to a market that has moderated, making drastic downward price swings less likely in many areas (barring shocks).
✅ Importance of Speed & Preparation
In markets where inventory is still lean, well-prepared buyers (pre‑approved financing, ready inspections, decisive offers) will be more competitive.
✅ Watch Local Variation
National trends matter — but real estate is local. In some markets, contracts are climbing; in others, they may still lag. Always check your city or county’s recent pending sale trends.
What Sellers and Agents Should Be Aware Of in 2025
- Pricing sensitivity: Overpriced homes are stagnating; well-priced and well‑staged homes still sell well.
- Marketing differentiation: Homes with energy efficiency, modern updates, or flexible spaces are more attractive.
- Flexibility with terms: Sellers may need to offer more incentives (e.g. covering closing costs, flexible leasebacks) to appeal to buyers.
- Monitoring early signals: Watch preliminary pending sale reports, buyer sentiment surveys, and mortgage application data — they often precede official NAR or MLS releases.
Bottom Line: A Tentative Turn — but Proceed Wisely
In 2025, contract signings appear to be stabilizing and, in some markets, showing early signs of recovery. While that’s encouraging, headwinds remain: price fatigue, affordability challenges, and rate sensitivity. For buyers, 2025 may offer better windows of opportunity than recent years. For sellers, it’s a market where strategy, pricing, and property condition matter more than ever.
Source: REALTOR® Magazine
“NAR: Contract Signings, Down Again, May Have Hit Bottom”
National Association of REALTORS®
