The U.S. housing market showed unexpected strength in late 2025 as pending home sales surged in November to their highest level in nearly three years, signaling a shift in buyer confidence and affordability conditions. According to newly released data from the National Association of Realtors (NAR), contracts signed to purchase previously owned homes rose 3.3 percent from October. This monthly increase not only surpassed many economists’ forecasts but also marked the strongest index reading since February 2023. On an annual basis, pending home sales rose 2.6 percent compared to November of the previous year, reinforcing the view that buyer interest is beginning to rebound after months of suppressed activity.
The sharp increase in contract signings comes amid improving market fundamentals that are drawing potential buyers back into the fold. One of the key drivers behind the recent uptick is the decline in mortgage rates. After spiking in 2024 and reaching multi-decade highs, mortgage rates for a 30-year fixed loan have eased in recent months, largely due to interest rate cuts implemented by the Federal Reserve earlier in the fall. As borrowing costs declined, affordability conditions improved, allowing more households to consider purchasing a home—a significant shift after a prolonged period of rate-induced stagnation in the housing sector.
Lawrence Yun, chief economist at the National Association of Realtors, pointed to lower mortgage rates and a rise in housing supply as the two primary factors fueling the market’s recovery. With broader inventory choices now available and home prices showing signs of plateauing in several regions, more buyers are finding opportunities to enter the market. Yun also emphasized that this rebound is likely to be sustained if borrowing costs continue to trend downward and household incomes maintain their current growth trajectory.
The jump in pending home sales is particularly notable given the broader context of the U.S. housing market over the past two years. Since 2022, rising interest rates, inflationary pressures, and limited housing stock have conspired to create challenging conditions for buyers. Many would-be homeowners were either priced out or discouraged from entering the market altogether, leading to a steady decline in home transactions throughout much of 2023 and into the first half of 2025. This latest data suggests a potential turning point, with increased buyer activity hinting at a more balanced and accessible market moving into 2026.
The gains in November were not confined to a single part of the country. Instead, all four major U.S. regions—the Northeast, Midwest, South, and West—recorded monthly and year-over-year increases in pending sales, a sign of widespread improvement rather than localized recovery. This broad-based growth adds credibility to the idea that market dynamics are shifting nationally, not just in select metropolitan areas.
While the improvement in pending sales is encouraging, experts caution that affordability remains a pressing concern for many buyers, particularly first-time purchasers. Despite declining mortgage rates, home prices in several high-demand regions remain elevated, and many potential buyers still face difficulties with down payments, credit access, and overall cost burdens. However, the moderation in pricing trends and increase in available listings are helping to ease these barriers incrementally.
Inventory levels, which have long been a pain point in the market, are also beginning to recover. More homeowners are opting to list their properties amid the perception of a more favorable selling environment, contributing to a modest but important expansion in housing supply. Increased choice for buyers helps reduce competition and bidding wars, which were common during the height of the housing boom in the pandemic years.
As 2026 approaches, the housing market stands at an inflection point. If current trends hold—steady mortgage rates, rising inventory, and stable economic conditions—the rebound in pending sales could translate into a more active and healthier market in the new year. Much will depend on how financial markets respond to broader macroeconomic signals, including inflation readings, Federal Reserve policy, and consumer sentiment. For now, the strong performance in November provides a rare dose of optimism in a sector that has faced considerable headwinds.
Industry professionals, including realtors and mortgage lenders, are reporting renewed optimism as traffic increases at open houses and mortgage applications tick up modestly. While not a full-scale recovery, the upward movement in pending sales offers a hopeful sign that the U.S. housing market may be emerging from its extended slump and entering a phase of gradual but sustainable growth.
