Affordability gains coaxed more buyers off the sideline last month, NAR said
Pending home sales increased 1.9% month-over-month in October, surpassing economist expectations and signaling renewed buyer interest amid declining mortgage rates, according to the National Association of REALTORS report.
The monthly gain marked a turnaround from September's revised 0.1% increase. However, the annual comparison remained soft, with pending contracts falling 0.4% compared to October 2024.
Regional affordability drives divergent performance
"The Midwest shined above other regions due to better affordability, while contract signings retreated in the more expensive West region," said Lawrence Yun, NAR chief economist.
The Midwest posted the strongest month-over-month performance at 5.3%, followed by a 2.3% gain in the Northeast.
The South grew 1.4%, while the West contracted 1.5%.
On an annual basis, only the Midwest and South maintained positive momentum—0.9% and 2.0%, respectively. The Northeast and West posted declines of 1.0% and 7.0%.
First American deputy chief economist Odeta Kushi characterized the market as "stabilizing rather than stalling out."
She noted that "for households that can clear the affordability hurdle, this combination of lower rates, a bit more inventory and cooling price pressures is creating a more favorable affordability environment than at any point earlier in the year."
Mortgage rate relief offers seasonal reprieve
Rate declines have provided temporary relief, with Freddie Mac data showing mortgage rates falling as the Federal Reserve resumed its interest rate cuts.
October's median mortgage payment on an existing home reached its lowest level of the year, according to Kushi's analysis.
However, momentum may prove fragile. Federal Reserve officials have signaled reluctance to cut rates again in December, though New York Fed president John Williams suggested declines could occur "in the near term."
Meanwhile, the unemployment rate climbed to 4.4% in September, undercutting the housing market's employment foundation.
Federal Reserve governor Christopher Waller said Monday he would advocate for an interest rate cut at the December Federal Open Market Committee (FOMC) meeting, prioritizing labor market weakness over persistent inflation concerns.https://t.co/ArwYpjEkpe
— Mortgage Professional America Magazine (@MPAMagazineUS) November 24, 2025
The real estate sector remains cautiously optimistic
Only 17% of NAR members expected increased buyer traffic over the coming three months, down from 20% in September.
Yun noted that "days on the market typically lengthen from November through February, providing better negotiating power to buyers during the holiday season."
The pending sales data suggests the market is correcting gradually rather than contracting sharply. Yet affordability gains remain fragile, dependent on sustained rate relief and economic resilience the broader data doesn't yet guarantee.
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