What are Pending Home Sales?
Pending home sales refer to properties that have an accepted purchase contract but have not yet closed. A "pending" status means the buyer and seller have agreed on terms and signed a contract, but the transaction is still going through the closing process -- title work, inspections, appraisal, loan underwriting, and final settlement. Pending sales are a leading indicator of future closed sales, typically running 1-2 months ahead of closing data.
The National Association of Realtors publishes a monthly Pending Home Sales Index (PHSI) that tracks contract signings nationwide and by region. Because contract signings happen before closings, the PHSI is considered a forward-looking indicator of housing market activity. A rising PHSI signals increasing sales volume in the coming months, while a declining PHSI suggests slowing activity.
Why pending sales matter for investors
For real estate investors and wholesalers, pending home sales data provides early insight into market momentum. If pending sales are rising in your target market, it indicates strong buyer demand -- which means your disposition pipeline should flow smoothly. If pending sales are declining, buyer demand is weakening, and you may need to adjust pricing or marketing strategies to move deals.
Pending sales data is also useful for comp analysis. When evaluating ARV for a flip or wholesale deal, pending sales (which represent current market sentiment) can be more relevant than closed sales (which reflect decisions made 1-3 months ago). A neighborhood with 5 pending sales at prices above recent closed sales suggests an appreciating market.
Pending vs. under contract vs. contingent
MLS terminology varies by region. "Pending" generally means the contract is past the inspection and contingency period, and the sale is expected to close. "Under contract" or "contingent" may indicate the contract still has active contingencies (inspection, financing, appraisal) that could cause the deal to fall through.
The fall-through rate for pending sales typically runs 3-8% in normal markets. During periods of tight lending standards or volatile conditions, fall-through rates can reach 15-20%. Properties that go pending and then return to active status ("back on market") often signal inspection issues, financing problems, or buyer cold feet.
Reading the Pending Home Sales Index
The PHSI is indexed to a baseline of 100, representing the average level of contract activity during 2001. An index of 110 means contract activity is 10% above that baseline. The index is seasonally adjusted to account for normal seasonal patterns in home buying (spring/summer peak, winter trough).
Month-over-month changes show short-term momentum. Year-over-year changes reveal the broader trend. Regional breakdowns (Northeast, Midwest, South, West) help investors understand geographic variation. The South typically has the strongest and most consistent pending sales activity due to population growth and affordability.
Using pending data in your market
At the local level, your MLS provides pending sales data in real time. Track pending listings in your target neighborhoods to understand: how quickly are new listings going pending (absorption speed), what price points are moving fastest, and how many pending sales eventually close versus fall through. This ground-level data is more actionable for individual investors than the national index.
For wholesalers, a high pending-to-active ratio (many pending sales relative to active listings) indicates a fast-moving market where disposition should be efficient. A low ratio suggests a slower market where you will need a larger buyer list and more aggressive marketing to move deals.