Home Sales Surge in December, but 2025 Remains Weakest Year in 3 Decades

Home sales rose substantially last month as mortgage rates eased, marking an upbeat coda to an otherwise grim year for the housing market, as full-year sales hit a 30-year low.

Closings on existing homes rose 5.1% in December from the prior month to a seasonally adjusted annual rate of 4.35 million, the largest monthly gain in sales since February 2024, the National Association of Realtors® reported Wednesday.

The December figure was up 1.4% from a year earlier and marked the strongest sales pace in nearly three years.

However, total home sales for full-year 2025 registered at 4.061 million without seasonal adjustment, coming in just 1,000 below the prior year's sales of 4.062 million. That marks the lowest annual total since 1995.

Annual home sales have now fallen for three straight years, with each year marking a new low not seen since 1995, when the country had 70 million fewer people than it does today.

Indeed, “2025 was another tough year for homebuyers, marked by record-high home prices and historically low home sales,” says NAR Chief Economist Lawrence Yun. “However, in the fourth quarter, conditions began improving, with lower mortgage rates and slower home price growth."

December home sales, after adjusting for seasonal factors, were the strongest since February 2023, with all four major regions improving from the prior month, noted Yun.

"Perhaps this is the beginning of the breakout, or maybe it's a fluke. We have to wait and see what's going to happen in the upcoming months," Yun told reporters on a call.

Mortgage rates helped, with the average rate on 30-year home loans at 6.19% last month, the lowest in more than a year, according to Freddie Mac.

"December homebuyers, who would likely have gone under contract in October and November, benefited from rates near their lowest levels in a year, and fortunately, mortgage rates have not climbed since," says Realtor.com® Chief Economist Danielle Hale.

Hale expects mortgage rates to remain steady to slightly lower heading into 2026, a trend that should put a firmer floor under sales in the coming year.

But affordability remains a challenge, particularly for first-time homebuyers, and home prices continue to rise. The median sales price for existing homes was $405,400 in December, up 0.4% from a year earlier.

Looking at full-year 2025, the median home sales price came in at $414,400, representing a 1.7% annual gain from the prior year.

Inventory tightens as sellers bide their time

Total housing inventory available for sale was at 1.18 million at the end of December, down 18.1% from November but up 3.5% from a year earlier.

It represented 3.3 months of supply at the current sales pace, down from 4.2 months in November but slightly above 3.2 months a year ago.

“Inventory levels remain tight,” says Yun. “With fewer sellers feeling eager to move, homeowners are taking their time deciding when to list or delist their homes. Similar to past years, more inventory is expected to come to market beginning in February.”

Indeed, in a weaker market, many sellers are choosing to delist their properties rather than accept offers below their dream price.

Delistings in October rose 45.5% year to date and 37.9% year over year. This makes 2025 the year with the highest national delisting rate since Realtor.com began tracking the metric in 2022.

Rays of hope for 2026

Despite the lackluster sales total for 2025, there are reasons to believe that the coming year will bring modest and marginal improvements.

Affordability is expected to improve somewhat, with the Realtor.com economic research team forecasting that mortgage rates will average 6.3%, and that incomes will rise faster than home prices.

This is expected to bring the share of median income needed to pay the typical mortgage down to 29.3%, marking the first time it has fallen below 30% since 2022.

That would mark slight improvement, but not a revolution in affordability. To return to 2019 conditions, when mortgage payments consumed 21% of income, it would take sharp, unlikely changes.

Mortgage rates would need to drop to 2.65%, incomes would need to rise 56%, or home prices would need to fall 35%, a recent Realtor.com analysis found.

None of those changes are expected, but the economist Yun said he was hopeful that additional rate cuts from the Federal Reserve in 2026 would bring mortgage rates down by one or two decimal points, which could take rates below 6%.

"Lower mortgage rates always lead to home sales," he said. "So, it looks like 2026 we will have an increase in home sales."