Pending Home Sales Decline — But Mortgage Rates Likely to Hold

Economists caution that concerns over inflation, the labor market, and the broader U.S. economy could push mortgage rates higher in the coming weeks and months.

Key Takeaways:

• Both new listings and pending home sales are slowing, signaling a drop in supply and demand amid the housing market’s typical seasonal slowdown.

• Mortgage rates remain relatively stable following the Fed’s expected short-term rate cut on Dec. 10.

• Heading into the final weeks of 2025, the economy presents a mixed picture, especially with conflicting signals from the labor market.

• Buyers and sellers appear to be taking a cautious approach, reflecting a wait-and-see strategy that aligns with the Federal Reserve’s outlook for monetary policy.

  
  

Recent economic data highlights that the seasonal slowdown in housing is being compounded by broader economic uncertainty, causing both sellers and buyers to hold off on decisions.

New Listings and Pending Sales Drop

New U.S. home listings fell 1.7% in the four weeks ending Dec. 7—the largest year-over-year decline in over two years, according to Redfin. Pending sales for the same period dropped 4.1%, marking the steepest decline in 10 months.

Looking ahead, Felder predicts, “Some homeowners will list their homes in 2026 once they have a clearer view of the economic landscape.”

Mortgage Rates Remain Steady After Fed CutFor current buyers, mortgage rates remain within a narrow range. Freddie Mac estimates the 30-year fixed-rate mortgage averaged 6.22% as of Dec. 11, slightly up from 6.19% the previous week. Mortgage News Daily, using a different methodology, noted a small dip in rates following the Fed’s anticipated Dec. 10 rate cut.

Lisa Sturtevant, chief economist at Bright MLS, warns that rates could rise slightly in the final weeks of 2025 as markets respond to mixed signals from the Fed. “Concerns about inflation potentially rebounding in 2026 could also push rates higher,” she said.

Anthony Smith, senior economist notes that if rates remain near this level in 2026, affordability could improve modestly. “While not a dramatic relief, rates should be low enough to partially offset continued—but moderate—home price growth,” he said.

Refinance Applications RiseDespite slower pending sales, mortgage applications ticked up, according to the Mortgage Bankers Association (MBA). Refinance applications led the increase, up 14% seasonally adjusted for the week ending Dec. 5, while purchase applications dipped slightly.

“Conventional purchase applications fell, but FHA purchase applications rose 5% as buyers continue to seek lower downpayment options,” said Joel Kan, MBA’s vice president and deputy chief economist.

Labor Market Remains UncertainOngoing disruptions in economic reporting, partly due to the federal government shutdown, continue to obscure the national economic picture—particularly the labor market.

Initial jobless claims rose by 44,000 to 236,000 for the week ending Dec. 6, the largest jump since March 2020, according to Bloomberg. Yet the week prior, claims were at their lowest level in over three years.

This uncertainty, coupled with unclear impacts from tariffs on inflation, influenced the Fed’s decision to signal a pause on additional short-term rate cuts in early 2026. The central bank intends to observe the effects of its three recent rate cuts before making further policy adjustments.