January homes sales tank more than 8% with potential buyers struggling
High home prices, declining supply, and weak consumer confidence in the economy continue to weigh on the U.S. housing market. Lawrence Yun, chief economist for the National Association of Realtors, calls this “a new housing crisis.”
Sales of previously owned homes fell a much larger-than-expected 8.4% in January from December to a seasonally adjusted annual rate of 3.91 million, according to NAR. Sales were 4.4% lower than January 2025. This is the slowest pace since December 2023 and the largest monthly decline since February 2022.
This count is based on closings, so there are contracts signed in November and December, when the average rate for a 30-year fixed mortgage didn’t move much before dropping slightly in January. The rate is currently 6.1%, according to Mortgage News Daily.
Regionally, sales fell month over month across the country, but were down the hardest in the South and West.
“Affordability conditions are improving, with NAR’s Housing Affordability Index showing that housing is the most affordable since March 2022,” Yun said in a statement. he said. “This is because wage growth is outpacing house price growth and mortgage rates are lower than a year ago. But supply is not keeping up this pace and remains quite low.”
But he also noted in a call with reporters that potential buyers are “still struggling” and that “tenants are not participating in the housing wealth.” He called the current market a crisis because “the movement is not happening. Americans are stuck.”
Inventory was down last month compared to December, but was still up 3.4% year-over-year. At the end of January, 1.22 million homes were for sale; At the current sales rate, this means a 3.7-month supply. The six-month supply is considered a balanced market between buyers and sellers.
The contraction in supply ensured that house prices remained in the positive zone. The average price of a home sold in January was $396,800, up 0.9% year over year and the highest price on record for January.
“As a result, homeowners are in a comfortable position financially. Since January 2020, the typical homeowner would have had housing wealth of $130,500,” Yun said. he added.
Homes are taking longer to sell this January, with 46 days compared to 41 days in January last year. Approximately 31% of sales were to first-time buyers; This rate was 28% compared to the previous year.
Sales remain strongest in the upper end of the market; In fact, the only price segment that was positive from a year ago was the over $1 million range. Sales fell the hardest on homes priced under $250,000.
