NAR Pending Home Sales Index – August 29, 2025 Update
The National Association of Realtors (NAR) has released its July 2025 Pending Home Sales Index (PHS) figures, providing a fresh snapshot of contract activity midway through the year. The report underscores the housing market’s continued struggle to find momentum, with contract signings falling well below both historical averages and long-term expectations despite recent stability in mortgage rates.
For July 2025, the Pending Home Sales Index registered 79.2, down sharply from June’s 88.2. This marks a 10.2% month-over-month decline, erasing the small gains seen earlier in the year. On a year-over-year basis, July’s reading was up slightly by 0.3% compared to July 2024 (79.0). However, this modest annual improvement does little to offset the steep shortfall from historical norms. The long-term July average stands at 109.3, leaving the current figure nearly 27.5% below typical levels for this time of year.
First Seven Months of 2025: Below Trend
Looking at the broader picture, pending sales from January through July 2025 totaled 556.1, a 2.2% decline year-over-year and 24.9% below the historical average of 739.9 for this period. This cumulative weakness highlights how little progress the market has made since the downturn began in 2023.
Contract activity in early 2025 started at 57.0 in January, climbed to 89.9 in March, and then lost steam with April (86.6) and May (87.8). June managed a slight rebound at 88.2 before collapsing to 79.2 in July, underscoring the fragile nature of buyer demand.
Historical Context: July as a Peak Month
Traditionally, July is one of the strongest months for pending sales. During the housing boom years of 2004–2006, readings averaged between 133 and 150, while the post-recession recovery of 2015–2019 consistently delivered July scores above 115. Even during the pandemic surge of 2020, the index reached 137.0 in July, fueled by historically low mortgage rates. Against this backdrop, the July 2025 figure of 79.2 illustrates just how muted today’s market remains.
Volatility and Market Behavior
One of the defining features of 2025 is the relative lack of volatility. While July’s 10.2% decline stands out as the largest monthly drop of the year, most changes so far have been in the low single digits. By comparison, earlier cycles saw swings of 20–30% in short timeframes, especially during the post-2008 recovery or the pandemic-era surge. Today’s numbers reflect a market that is not collapsing, but clearly stalled—caught between affordability challenges and limited buyer confidence.
Affordability and Inventory Challenges
Mortgage rates have leveled off compared to the volatile spikes of 2022 and 2023, but home prices remain high relative to incomes, creating a persistent affordability gap. Inventory has improved slightly in certain markets but remains tight in many desirable submarkets, leaving buyers with fewer affordable options. This dynamic has kept contract signings suppressed despite more stable financing conditions.
Forward-Looking Implications
The Pending Home Sales Index is a leading indicator for existing home sales, typically preceding closed transactions by one to two months. With July’s reading slipping to its lowest level since January, the outlook for late-summer and early-fall closings remains weak. Unless affordability improves meaningfully or broader economic conditions shift, contract activity is likely to remain trapped at historically low levels.
Long-Term Perspective
Over the past two decades, the median July reading has been 112.9, further emphasizing how underperforming the current market is. Pending home sales are not showing signs of a rebound, and the gap between today’s conditions and historical benchmarks underscores the ongoing challenges facing buyers, sellers, and agents alike.
Takeaway
The July 2025 Pending Home Sales Index reinforces the reality of a housing market in stagnation. While the steep monthly decline breaks from the relatively muted volatility of earlier in the year, the broader trend remains unchanged: contract activity is well below both recent and long-term norms. Until affordability pressures ease or demand fundamentals shift, meaningful gains in pending sales remain unlikely.
