According to the National Association of Realtors (NAR), pending home sales in February 2025 fell 3.6% year-over-year, a sobering reminder that this year’s housing market may continue to underperform. Despite this, month-over-month activity was up 2%, providing a glimmer of optimism as the spring buying season gets underway. Still, the broader outlook remains mixed—and highly regional.
📍 Regional Breakdown: A Tale of Four Markets
The February data reveals clear differences across the U.S. real estate landscape:
- South: Pending home sales surged +6.2% month-over-month, driven by affordable housing markets and new construction.
- Northeast & Midwest: These regions held relatively flat, signaling stable—yet slow—activity.
- West: The Western U.S. saw a -3% decline in pending sales, which includes California’s higher-priced markets such as Los Angeles, San Diego, and San Francisco.
For buyers and sellers in Los Angeles real estate, especially in areas like Brentwood, Pacific Palisades, and Santa Monica, this decline mirrors what we’re seeing on the ground: slower buyer activity, especially at higher price points, combined with growing inventory.
💸 Record-High Monthly Housing Payments
Buyers are feeling the financial strain. According to Redfin data, the median monthly mortgage payment reached a record high of $2,807 during the four weeks ending March 23. That’s a steep cost, even for well-qualified buyers—and it’s likely to keep first-time buyers on the sidelines.
This affordability challenge is further complicated by elevated mortgage rates. With 30-year fixed loans hovering around 6.6%–6.9%, many buyers are finding that even modest homes push the limits of their monthly budget.
📦 Inventory Is Finally Rising—But So Are Prices
There’s good news for buyers on one front: inventory is on the rise nationwide. NAR reports a 27.5% year-over-year increase in for-sale inventory, giving buyers more options and potentially more negotiating power.
However, this doesn’t mean home prices are dropping. In fact, prices are still climbing, especially in competitive markets like Los Angeles. What we’re seeing is a disconnect between supply and affordability—inventory is growing, but not always where buyers need it most.
🏡 Will New Construction Fill the Gap?
In some regions, new construction homes may provide a more accessible entry point for buyers—particularly in the $300,000–$400,000 range, where demand remains strong. In Southern California, developers in outlying areas like Inland Empire, Ventura County, and northern LA suburbs are still offering builder incentives, including mortgage rate buydowns and closing cost credits.
If you’re a buyer who has been priced out of coastal communities like Brentwood or Pacific Palisades, exploring new-build options might be a smart strategy in this market.
🔎 Our Take: A Cautiously Watchful Spring Market
This spring may be tougher than many anticipated. While the month-over-month growth in pending home sales is encouraging, the year-over-year decline—and the rising cost of homeownership—suggests we could see weaker-than-expected sales activity this season.
For agents, sellers, and serious buyers, this market still presents opportunity—but you’ll need a savvy, data-informed strategy to succeed.
📞 Contact Abdo Pierre Faissal for unparalleled real estate service.
📧 [email protected] | 📲 310-620-1038
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