Pending Home Sales Explained: What Signed Contracts Signal Before Closings

A pending home sale is a home sale in which the contract has been signed but the transaction has not yet closed. The Pending Home Sales Index (PHSI), published by the National Association of REALTORS® (NAR), tracks that contract activity for existing homes. It measures signed contracts, not completed sales. Because contracts come before closings, NAR describes the index as a leading indicator of existing-home sales.

In its most recent release, on October 20, 2026, NAR reported that pending home sales decreased 7.3% from August to September 2026 and were 11.3% lower than in September 2025. All four major U.S. regions declined on both a monthly and an annual basis. (Source: NAR, Pending Home Sales release, October 20, 2026.)

Those figures describe pending-contract activity. They are not declines in completed home sales, and they are not changes in home prices. A contract signed in September may close in October, in November, later, or not at all.

This article explains what counts as a pending sale, what the PHSI measures, why it tends to run ahead of closings, why not every pending contract closes, what an index level of 100 means, and what the indicator can and cannot tell you about a housing market. It contains no forecast.

About the data

The PHSI is a separate report from NAR's Existing-Home Sales, which measures completed transactions. This article uses NAR's headline percentage changes as published. It does not reproduce NAR's index tables. NAR restricts redistribution of its Pending Home Sales data, and the article's purpose is to explain the indicator rather than republish it.

What a pending home sale actually means

NAR describes the moment a sale becomes pending this way: when a seller accepts a sales contract on a property, it is recorded in a Multiple Listing Service as a pending home sale. A sale is listed as pending when the contract has been signed but the transaction has not closed. (Sources: NAR, Pending Home Sales methodology; October 20, 2026 release.)

That places a pending sale in the middle of a home transaction:

1Active listingOffered for sale

2Contract signedOffer accepted

3PendingUnder contract

4Financing, inspection, appraisal

5ClosingTransaction completed

6Existing-home saleCounted as a completed sale

1

Active listing

Offered for sale

2

Contract signed

Offer accepted

3

Pending

Under contract

4

Financing, inspection, appraisal

5

Closing

Transaction completed

6

Existing-home sale

Counted as a completed sale

Timing varies, and not every pending contract reaches closing.

• Active listing: the home is offered for sale.
• Contract signed: a buyer's offer is accepted and the sales contract is signed.
• Pending: the contract is in place, but the sale has not closed.
• Financing, inspection, and appraisal: the steps that typically need to be completed before settlement.
• Closing: the transaction is completed.
• Existing-home sale: once a qualifying transaction closes, it becomes part of the completed-sales activity measured by NAR's separate Existing-Home Sales report.

Not every transaction follows this path in the same way or on the same timeline, and not every pending contract reaches closing.

A pending sale is therefore further along than a listing: a buyer has committed under contract. But it is earlier than a completed sale. Ownership has not yet transferred, and the contract can still be delayed or cancelled.

What the Pending Home Sales Index measures

NAR describes the PHSI as a leading indicator of housing activity that measures housing contract activity. It is based on signed real estate contracts for existing single-family homes, condos, and co-ops. (Source: NAR, Pending Home Sales background.)

Three features define what the index represents.

• It measures contract activity. The PHSI tracks how much sales-contract activity is taking place, not how many homes changed hands. A higher index reading means more contract activity relative to the index's baseline. A percentage change describes how that activity moved between periods.
• It covers existing homes. The index is built from contracts on existing single-family homes, condominiums, and co-ops. It does not cover contracts on newly built homes, which are measured in other data.
• It is an index, not a count. The PHSI is expressed relative to a base period rather than as a number of contracts.

NAR builds the index from data supplied by Multiple Listing Services and large brokers, and it publishes national and regional results each month. (Sources: NAR, Pending Home Sales background and October 20, 2026 release.)

The purpose of the index is timing. Because contracts are signed before sales close, contract activity offers an earlier read on the direction of completed sales than closings data can.

Why PHSI is not the same as a pending listing count

"Pending" appears in two different kinds of housing data, and they measure different things.

Pending listing

Question

What is the status of this individual listing?

Type

Property or listing status

Pending Home Sales Index

Question

How is aggregate signed-contract activity changing?

Type

Market activity index

Related concepts, different measures.

A pending listing is a property-level status indicating that the home is under contract and recorded as pending under the listing source's status rules. Some listings data sources also count how many listings are in pending status on a typical day, which is a stock measure of homes under contract at a point in time. The Metro Analytics Insight on what housing inventory and active listings actually measure explains that stock measure alongside active listings and months of supply.

The PHSI is different. It is NAR's index of contract activity, built from its own data sources and methodology and expressed relative to a base year. It is not a count of listings in pending status, and a pending-listing figure from a listings website should not be compared directly with PHSI changes.

Why pending home sales lead existing-home sales

The logic is the order of events. A home goes under contract before it is sold, so contract activity shows up in the data before the corresponding closings do. NAR states that because a home goes under contract a month or two before it is sold, the PHSI generally leads Existing-Home Sales by a month or two. (Source: NAR, Pending Home Sales page and background.)

NAR's release notes add that, in developing the index, it was demonstrated that the level of monthly sales-contract activity parallels the level of closed existing-home sales in the following two months. (Source: NAR, October 20, 2026 release.)

That relationship is what makes the PHSI useful: a change in contract activity this month offers early information about the direction of closings over the next month or two.

Contract signed

↓Typically one to two months↓

Closing / existing-home sale

OrDelay or cancellation

Leading indicator ≠ guaranteed closing.

It does not make the PHSI a precise forecast. The index does not say exactly how many homes will close, or in which month. Two things keep the relationship approximate:

• Timing varies. NAR notes that the time between a pending contract and a completed sale is not identical for all home sales.
• Not every contract closes. Some pending sales are cancelled before settlement, as the next section explains.

(Source: NAR, October 20, 2026 release and Pending Home Sales methodology.)

The PHSI is best read as an early directional signal for existing-home sales, not as a guaranteed preview of next month's closings.

Why not every pending sale becomes a closed sale

A signed contract is a commitment, but it is usually not the final step. Several things must typically happen before a sale closes, and any of them can delay or derail it. NAR identifies variations in the time from pending contract to closed sale caused by issues such as:

• buyer difficulties obtaining mortgage financing
• home inspection problems
• appraisal issues

(Source: NAR, October 20, 2026 release.)

Some contracts do not close at all. NAR's methodology states plainly that not all pending home sales go to closing, and that a certain percentage of properties that go under contract are cancelled, or "fall out," before settlement. (Source: NAR, Pending Home Sales methodology.)

NAR's methodology page also says its sample has shown that more than 80% of pending home sales go to settlement within two months, with a significant share of the rest closing in months three and four. (Same source.) That is a description of NAR's sample on its longstanding methodology page. It is not a closing rate for September 2026 contracts, and it should not be read as a prediction of how many recent contracts will close.

NAR explains how it treats fallout. Because the index is based on aggregated trends, normal cancellations do not skew it unless there is an abnormal spike or decline. NAR says it monitors fallout in selected MLSs and would adjust the index to correct for an abnormal change. (Same source.) NAR does not publish a current monthly cancellation rate alongside the index, and this article does not estimate one.

What an index level of 100 actually means

The PHSI is published as an index level, and its scale is easy to misread. NAR defines an index of 100 as equal to the average level of contract activity during 2001, the first year it analyzed. (Sources: NAR, Pending Home Sales methodology; October 20, 2026 release.)

PHSI = 100

↓

Average level of contract activity during 2001

Not 100 contractsNot 100%Not a home price

This article does not cite a current national index level.

That makes 100 a baseline, nothing more. In particular:

• 100 is not 100 contracts, or 100,000 sales.
• 100 is not 100%. It is not a percentage of anything.
• 100 is not a price. The PHSI says nothing about what homes cost.

An index reading above 100 means contract activity is above the 2001 average under the PHSI methodology. A reading below 100 means it is below that baseline. The index is a normalized measure, so a reading should not be converted mechanically into a share of 2001 contracts or of "normal" sales.

The 2001 base is a normalization reference for the index, not a threshold for a healthy, balanced, strong, or weak housing market.

This article does not cite a current national index level. It uses NAR's published percentage changes, which are the figures the release text states directly.

What the latest September 2026 data shows

NAR's October 20, 2026 release reported the following changes in pending home sales:

Pending home sales changed across all four regions

Region	Change vs. August 2026	Change vs. September 2025
Northeast	-4.2%	-9.4%
Midwest	-6.5%	-8.7%
South	-8.2%	-12.0%
West	-9.2%	-15.0%

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Source: NAR, Pending Home Sales release, October 20, 2026. Changes in pending-contract activity, not completed sales or prices.

National pending home sales · September 2026

-7.3%

Month over month

-11.3%

Year over year

Changes in pending-contract activity, not completed sales.

Source: National Association of REALTORS®

Read correctly, pending home sales decreased 7.3% from August to September 2026 and 11.3% from September 2025 under NAR's Pending Home Sales measure. Contract activity declined in all four regions on both comparisons. The national monthly and annual figures are not changes in closed sales, and the annual figure is not a change in home prices.

The regional figures show that the decline was broad but uneven in size. They are measurements of contract activity, not rankings of regional housing markets.

It is useful to separate what NAR measured from how NAR interpreted it. The percentage changes above are measured data. In the same release, NAR Chief Economist Lawrence Yun said that market conditions weakened in September due to fast-rising mortgage rates, and that buyers and sellers may be holding back until mortgage rates move favorably. (Source: NAR, October 20, 2026 release.) That is NAR's explanation of the data, not something the index itself measures. The PHSI records how much contract activity occurred. It does not identify why.

The September figures describe one month of contract activity. They do not establish a trend on their own, and they do not determine what completed sales or prices will do next.

Pending sales and closed sales can move differently

Because pending sales and closed sales describe different stages of a transaction, the two can move in different directions in the same calendar month.

September 2026 is an example.

NAR's separate Existing-Home Sales report showed completed existing-home sales increasing 1.5% from August to September on a seasonally adjusted basis, while pending-contract activity decreased over the same calendar months.

(Sources: NAR, Existing-Home Sales release, October 13, 2026; Pending Home Sales release, October 20, 2026.)

This is not a contradiction. The two figures measure different transactions at different stages:

• Different cohorts. Many of the sales that closed in September went under contract in earlier months. The contracts signed in September will mostly close later.
• Different stages. One figure counts closings. The other tracks contracts, some of which will be delayed or cancelled before they close.
• Variable timing. Contract-to-close periods differ from sale to sale, so contract activity does not convert into closings on a fixed schedule.

The practical lesson is that a monthly pending-sales change and the same month's existing-home-sales change should not be read as competing measures of one thing. Within NAR's framework, contract activity in one month is an early signal for closings in the following months. It is not a check on the closings reported for the same month.

What PHSI can—and cannot—tell you about a housing market

Used carefully, the PHSI can help describe:

• The direction of contract activity: whether signed contracts on existing homes are rising or falling.
• The near-term transaction pipeline: an early signal for completed existing-home sales over the following month or two.
• Regional differences: how contract activity is changing across the four major U.S. regions.
• Changes over time: when compared within the same series and basis.

On its own, the PHSI cannot tell you:

• the exact number of future closings, or exactly what Existing-Home Sales will show
• the cancellation rate for any particular month
• home prices, price appreciation, or where prices are headed
• whether housing is affordable
• how much inventory is for sale, or the months' supply
• whether there is a structural housing shortage
• total housing demand
• mortgage-credit availability or future mortgage rates
• investment returns, or whether a market is "good" or "bad"

The PHSI also is not a direct measure of housing demand. Contract activity reflects buyers, but it is also shaped by how many homes are available, financing conditions, affordability, seller behavior, local conditions, and transaction timing. A 7.3% decline in pending sales is not a 7.3% decline in demand.

The index is a leading indicator of transaction activity. It is not a forecast of prices, and it is not a recommendation about any market.

How to compare pending-home-sales data correctly

Pending-sales comparisons are only meaningful when the measurement is held constant. Before comparing two figures, check that they share:

• The same source: NAR's PHSI with NAR's PHSI, not with a pending-listing count from another provider.
• The same series and seasonal basis: if you use index levels rather than published changes, confirm whether each is seasonally adjusted, and don't mix adjusted with unadjusted values.
• The same geography: national with national, or the same region with the same region.
• The same comparison period: month-over-month with month-over-month, or year-over-year with year-over-year.
• The same release vintage, where practical: figures for the same month can differ between releases.

Two common errors are worth naming.

• Mixing comparison periods. A regional year-over-year change and a national month-over-month change answer different questions. For example, the West's −15.0% annual change and the nation's −7.3% monthly change should not be set side by side as if they were equivalent.
• Mixing units. A PHSI index level is not the same kind of number as NAR's existing-home sales figure, which is reported as a seasonally adjusted annual rate of completed sales. Comparing the two directly, as if both were counts of homes, mixes an index of contracts with an annualized count of closings.

For local housing context, you can explore Metro Analytics market pages. The Metro Analytics methodology explains how the measures on those pages are defined and sourced.

How PHSI differs from housing inventory and house-price indexes

Three commonly cited housing measures answer three different questions:

PHSI, housing inventory, and FHFA HPI measure different things

Measure	Question it answers
Pending Home Sales Index	What is happening to signed-contract activity on existing homes?
Housing inventory	How much for-sale stock is available, under a given source's methodology?
FHFA House Price Index	How are house prices changing for repeat transactions on the same properties?

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Contract activity, stock, and price change are different measures.

PHSI is not inventory. Inventory measures how many homes are available. The PHSI measures how much contract activity is occurring. A market can see contract activity fall while inventory rises, or other combinations, and neither measure determines the other. See what housing inventory and active listings actually measure.

PHSI is not a price measure. The index tracks contracts, not prices, so a decline in pending sales does not show that prices fell, and a rise does not show that they rose. For price change, see how the FHFA House Price Index measures price change.

PHSI also differs from new-construction measures such as housing starts, which track when building begins on new homes rather than contracts on existing ones. The Insight on how permits, housing starts, and completions measure the construction pipeline covers that side of supply.

Contract activity, for-sale stock, and price change are related, but they are different measures.

The takeaway

A pending home sale is a contract that has been signed but not yet closed. NAR's Pending Home Sales Index tracks that contract activity for existing single-family homes, condos, and co-ops. Because contracts come before closings, it generally leads completed existing-home sales by one to two months.

Leading is not the same as guaranteeing. Contract-to-close timing varies, and not every contract reaches settlement. The index is expressed relative to a 2001 baseline of 100, so a reading is not a count of contracts or a percentage. And the PHSI is neither a price measure, an inventory measure, nor a forecast. September 2026's 7.3% monthly decline and 11.3% annual decline describe contract activity under NAR's methodology, not completed sales, prices, or demand.

To see local housing context for a specific area, explore Metro Analytics Markets, or view the Methodology to see how each measure is built.