Still, sales are down from a year ago, but moderately lower mortgage rates this year could accelerate the market, says NAR Chief Economist Lawrence Yun.
Contract to purchase a home
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The real estate market thawed in February after home sales froze during a frigid January. Contract signings, a gauge of future homebuying activity, jumped 2% last month, the National Association of REALTORS® reported Thursday. That follows an NAR report last week showing a 4.2% gain in existing-home sales in February.

The South, which bore the brunt of lower pending home sales in January, saw the strongest hike in February at 6.2%. Contract signings rose a modest 0.7% in the Midwest but fell 3% in the West and 0.9% in the Northeast.

Market dynamics are still regaining their footing, says NAR Chief Economist Lawrence Yun. “Despite the modest monthly increase, contract signings remain well below normal historical levels,” he says. “A meaningful decline in mortgage rates would help both demand and supply—demand by boosting affordability, and supply by lessening the power of the mortgage rate lock-in effect.”

NAR projects mortgage rates to fall moderately this year, averaging 6.4% in 2025 and 6.1% in 2026, as the Federal Reserve forecasts slower economic growth. “The current high national debt will prevent mortgage rates from falling drastically—and certainly not to the 4%-to-5% range seen during President Donald Trump’s first term,” Yun says.

If that’s not enough to get your clients off the sidelines, try talking about soaring home equity. Yun said at NAR’s Real Estate Forecast Summit last week that sharing with clients the disparity in median net worth between homeowners and renters—$400,000 versus $10,000, respectively, according to NAR data—can be a strong motivator.

Inventory also is rising, which is another motivating factor for home buyers. NAR predicts existing-home sales will rise 6% in 2025 and 11% in 2026. And the new-home market continues to offer robust inventory—and savings in the form of builder incentives; NAR predicts new-home sales will rise 10% in 2025 and 5% in 2026. The association expects the national median home price to increase 3% in 2025 and 4% in 2026.

“Home price growth will moderate due to more supply coming onto the market,” Yun says.