Rising home prices, weak supply and declining consumer confidence in the economy continue to weigh on the U.S. housing market. Lawrence Yun, chief economist at the National Association of Realtors, calls this the “new housing crisis.”
According to NAR, existing home sales in January fell 8.4% from December, significantly exceeding expectations, to a seasonally adjusted annual rate of 3.91 million units. Sales decreased by 4.4% compared to January 2025. This was the slowest pace since December 2023 and the largest monthly decline since February 2022.
This count is based on deals, so deals were likely signed in November and December, when average interest rates on 30-year fixed mortgages didn’t change much until January when they fell slightly. That rate currently stands at 6.1%, according to Mortgage News Daily.
By region, sales decreased month over month across the country, with the biggest declines occurring in the South and West.
“Housing affordability conditions are improving, with NAR’s Home Price Index showing the most affordable housing since March 2022,” Yun said in the release. “This is because wage increases are outpacing house price growth and mortgage rates are lower than they were a year ago. However, supply has not kept pace and remains quite low.”
But he said on a call with reporters that potential buyers “still struggle” and that “renters are not participating in the housing wealth.” He characterized the current market as a crisis, citing “no movement. Americans are stuck.”
Inventories in January decreased from December, but were still up 3.4% year-on-year. As of the end of January, 1.22 million homes had been sold, equivalent to 3.7 months of supply at the current sales pace. A six-month supply is considered a balanced market between buyers and sellers.
Tight supply kept housing prices in positive territory. The median price of homes sold in January was $396,800, an increase of 0.9% from the same month last year and the highest price ever for a January.
“As a result, homeowners are in a better position financially. Since January 2020, the typical homeowner will have accumulated $130,500 in home equity,” Yun added.
Homes are taking longer to sell in January, 46 days compared to 41 days in January 2025. About 31% of sales were to first-time buyers, up from 28% a year ago.
Sales at the higher end of the market continue to be strong. In fact, the only price range that was positive from a year ago was the $1 million-plus range. Homes selling for less than $250,000 saw the biggest decline.
