High home prices, faltering supply and weaker consumer confidence in the economy all continue to weigh on the U.S. housing market. The chief economist for the National Association of Realtors, Lawrence Yun, is calling it “a new housing crisis.”
Sales of previously owned homes in January dropped a much wider-than-expected 8.4% from December to a seasonally adjusted, annualized rate of 3.91 million, according to the NAR. Sales were 4.4% lower than January 2025. That is the slowest pace since December 2023 and the biggest monthly drop since February 2022.
This count is based on closings, so contracts that were likely signed in November and December, when the average rate on the 30-year fixed mortgage didn’t move much before dropping slightly in January. That rate is now 6.1%, according to Mortgage News Daily.
Regionally, sales fell across the nation month to month but were down the most in the South and West.
“Affordability conditions are improving, with NAR’s Housing Affordability Index showing that housing is the most affordable it’s been since March 2022,” Yun said in a release. “This is due to wage gains outpacing home price growth and mortgage rates being lower than a year ago. However, supply has not kept pace and remains quite low.”
But he also noted on a call with reporters that potential buyers are “still struggling,” and “renters are not participating in housing wealth.” He characterized the current market as a crisis because, “the movement is not happening. Americans are stuck.”
Inventory came down in January from December but was still up 3.4% year over year. There were 1.22 million homes for sale at the end of January, which at the current sales pace is a 3.7-month supply. A six-month supply is considered a balanced market between buyer and seller.
Tighter supply kept home prices in positive territory. The median price for a home sold in January was $396,800, up 0.9% year over year and the highest January price on record.
“Homeowners are in a financially comfortable position as a result. Since January 2020, a typical homeowner would have accumulated $130,500 in housing wealth,” Yun added.
Homes are taking longer to sell, at 46 days in January versus 41 in January 2025. About 31% of sales were to first-time buyers, up from 28% a year ago.
Sales continue to be strongest on the higher end of the market; in fact, the only price segment in the positive from a year ago was the $1 million-plus range. Sales dropped the most for homes priced below $250,000.
