Pending home sales dropped 5.5 percent in December 2024, following four consecutive months of increases, according to the National Association of Realtors (NAR).

All four regions experienced month-over-month decreases in transactions, with the most significant drop in the West. All four regions also saw year-over-year decreases, with the Midwest seeing the largest.

The Pending Home Sales Index (PHSI) fell 5.5 percent to 74.2 in December. Year-over-year, it declined 5 percent. Last year’s low point occurred in July 2024 at 70.2. An index of 100 is equal to the level of contract activity in 2001.

“After four straight months of gains in contract signings, one step back is not welcome news, but it is not entirely surprising,” NAR Chief Economist Lawrence Yun said. “Economic data never moves in a straight line. High mortgage rates have not significantly dented housing demand due to greater numbers of cash transactions.”

The Northeast PHSI fell 8.1 percent from November to 62.3, down 1.3 percent from December 2023. The Midwest index shrunk 4.9 percent to 74.3 in December, down 6.9 percent year-over-year.

The South PHSI slid 2.7 percent to 90.6 in December, down 5.1 percent from a year ago. The West index fell by 10.3 percent from the prior month to 57.7, down 5.1 percent year-over-year.

“Contract activity fell more sharply in the high-priced regions of the Northeast and West, where elevated mortgage rates have appreciably cut affordability,” Yun said. “Job gains tend to have greater impact in more affordable regions. It is unclear if heavier-than-usual winter precipitation impacted the timing of purchases.”