U.S. existing-home sales plunged 8.4% month over month in January to a seasonally adjusted annual rate of 3.91 million, the National Association of Realtors (NAR) reported, marking the slowest pace since December 2023 and the steepest monthly drop since February 2022. Sales were 4.4% below January 2025 levels. NAR Chief Economist Lawrence Yun described the downturn as “a new housing crisis,” saying many prospective buyers remain “still struggling” even as some affordability measures improve. Inventory fell from December but remained modestly higher than a year earlier, keeping supply tight and prices resilient.
Key Takeaways
- January existing-home sales declined 8.4% from December to a 3.91 million annualized pace, the largest monthly fall since February 2022.
- Sales were 4.4% lower than in January 2025, and the January median home price rose to $396,800, up 0.9% year over year and the highest January on record.
- Housing inventory totaled 1.22 million homes at month-end, a 3.7-month supply at the current sales pace and up 3.4% from a year earlier; a six-month supply is considered balanced.
- Thirty-year fixed mortgage rates averaged about 6.1% in January, per Mortgage News Daily; contracts counted in closings were likely signed in prior months when rates were steadier.
- Homes took a median 46 days to sell in January versus 41 days a year earlier; first-time buyers accounted for roughly 31% of transactions, up from 28% in January 2025.
- Sales fell across U.S. regions, with the largest month-to-month declines in the South and West, and the only price tier showing year-over-year gains was the $1 million-plus segment.
Background
The NAR release reflects closings, not when purchase contracts were signed, which can lag by several weeks. Contracts likely signed in November and December were counted in January closings; mortgage rates were relatively stable in late 2025 before easing slightly in January 2026. That timing is important because mortgage-cost expectations influence buyer behavior and contract activity.
Affordability measures have improved in part because wages have outpaced home-price growth and mortgage rates are lower than a year ago, according to NAR’s Housing Affordability Index, which NAR says is the most favorable since March 2022. Nevertheless, supply has not expanded enough to meet demand, a structural imbalance that underpins higher prices and constrains movement among homeowners.
Longer-term trends—low new construction, limited resale inventory from owners with low locked-in rates, and geographic shifts in demand—have contributed to a market that favors sellers in many metro areas. Policymakers, lenders and builders have tried various responses, but change in inventory and entry-level affordability has been slow to materialize.
Main Event
NAR reported that existing-home sales dropped 8.4% month to month in January, to a 3.91 million seasonally adjusted annualized rate. This reading is the weakest since December 2023 and the largest single-month decline since February 2022. Regionally, the South and West posted the steepest month-to-month sales declines, while other regions also softened.
Inventory at the end of January stood at 1.22 million units, up 3.4% from a year earlier but down from December, yielding a 3.7-month supply at the current sales pace. Market participants generally view six months of supply as roughly balanced between buyers and sellers; at under four months, the market remains tilted toward sellers. That limited supply helped push the nationwide median sale price to $396,800, the highest January median on record.
Market dynamics showed mixed signals: homes spent a median 46 days on market in January versus 41 days a year earlier, indicating slower turnover, while first-time buyers increased to about 31% of sales from 28% a year earlier. Sales declines were most pronounced in lower-priced tiers, with the sub-$250,000 segment experiencing the largest drops, even as the $1 million-plus tier was the only segment showing year-over-year growth.
Analysis & Implications
The 8.4% monthly decline and 4.4% year-over-year drop underscore a market grappling with affordability and supply constraints simultaneously. Although the Housing Affordability Index shows some improvement driven by wage gains and lower rates versus a year ago, that improvement has not translated into broadly increased purchasing power for renters or first-time buyers. Many prospective buyers still face high downpayment barriers and localized price pressures.
Tighter supply keeps upward pressure on prices despite slower sales, entrenching wealth gains for existing homeowners while limiting mobility. NAR’s note that a typical homeowner has accumulated roughly $130,500 in housing wealth since January 2020 highlights the uneven distribution of benefits: those already in homes have seen equity gains, while those shut out of ownership miss that wealth accumulation.
For policymakers, the data present conflicting signals. Falling sales might reduce near-term inflationary pressure from housing, but persistent supply shortages and high entry costs argue for targeted measures to boost affordable inventory—such as zoning reform, incentives for entry-level construction, and downpayment assistance programs. Lenders and servicers may see continued demand for adjustable-rate and other nontraditional products if fixed rates remain elevated.
Looking ahead, further rate declines could revive contract activity, but structural supply constraints and demographic demand will determine whether a sustained recovery in sales occurs. If inventory remains under six months and price growth continues, affordability pressures will persist for newcomers to the market.
| Metric | January 2026 | Year-over-Year |
|---|---|---|
| Existing-home sales (annualized) | 3.91 million | -4.4% |
| Monthly change | -8.4% | — |
| Median price | $396,800 | +0.9% |
| Inventory (units) | 1.22 million | +3.4% |
| Months supply | 3.7 months | — |
| 30-year fixed rate (avg.) | 6.1% | Lower vs 1 year ago |
The table summarizes key NAR figures for January 2026. These metrics show a market with constrained supply and persistent price pressures even as transaction velocity slows. The months-supply figure is well below the roughly six months typically cited as balanced, explaining sustained price resilience.
Reactions & Quotes
NAR Chief Economist Lawrence Yun framed the situation strongly while conceding some positive affordability data. His remarks contextualize the numbers as both an affordability story and a mobility problem for American households.
“This is a new housing crisis,”
Lawrence Yun, NAR (association)
On a call with reporters, Yun added that many prospective buyers remain “still struggling” and that renters are not converting those rental payments into housing wealth through purchases. He pointed to wage gains and slightly lower mortgage rates versus a year ago as partial relief, but emphasized that supply shortfalls blunt broader improvement.
“Renters are not participating in housing wealth,”
Lawrence Yun, NAR (association)
Industry observers noted that sales reported for January reflect closings, so contract activity likely predates the small rate decline in January. Mortgage-market tracker Mortgage News Daily reported a 30-year fixed average of about 6.1% in January, a key input for affordability calculations and buyer decision-making.
Unconfirmed
- NAR’s description of the downturn as “a new housing crisis” is an economic interpretation rather than a formally defined crisis; the long-term severity and policy implications remain subject to debate.
- The degree to which contracts counted in January closings were signed in November or December is inferred from typical closing timelines; exact contract-date distributions were not published with the NAR summary.
Bottom Line
January’s 8.4% collapse in existing-home sales to a 3.91 million annualized pace signals a notable pullback in transaction activity even as median prices hit a January record. The data highlight a bifurcated market: homeowners broadly accrued equity gains, while many potential buyers—particularly at lower price points—remain priced out or unable to move.
Absent a material increase in supply or a sustained decline in mortgage rates, the market is likely to stay tight and uneven, with policy and industry responses needed to address entry-level affordability. For buyers and sellers, the near-term outlook will hinge on whether interest rates ease further and whether inventory growth picks up meaningfully.