Leaders of the Presbyterian Church, which owns the property at 202 Beaver St., told members in an emailed newsletter they will not raze the house as planned.
The brief statement by the church's governing body said it would "communicate to the congregation in the very near future specific information on potential funding of the project and other related details."
Save the Pink House organizer Peter Floyd said the decision is "certainly progress."
"The community has spoken, (and) the church has listened," he said. "The opportunity to do something that benefits what the church wants to do and what the community wants is there."