Buckle up: a mounting housing crisis is unfolding as January sales plummet more than 8%, signaling trouble for the U.S. housing market. The scene is set by persistently high prices, stubbornly tight supply, and wavering consumer confidence, prompting Lawrence Yun, the chief economist at the National Association of Realtors, to label the situation a “new housing crisis.”
In January, sales of previously owned homes fell by 8.4% from December, reaching a seasonally adjusted annual rate of 3.91 million, according to NAR data. On a year-over-year basis, sales were 4.4% lower than January 2025. This marks the slowest pace since December 2023 and represents the largest monthly drop since February 2022. It’s important to note that this figure reflects closings, which follow contracts likely signed in November and December when the 30-year fixed mortgage rate had been relatively steady before a slight dip in January. The current rate stands at about 6.1%.
Regionally, activity declined across the board, with the South and West showing the steepest year-over-year declines. Yun emphasizes that while affordability has technically improved—driven by wage gains outpacing home-price growth and mortgage rates easing from a year ago—the supply gap remains a significant obstacle. In his words, affordability is at its best since March 2022, but inventory hasn’t kept pace with demand, leaving buyers constrained.
Yet on a press call, Yun also highlighted ongoing hurdles for buyers: many potential buyers remain “still struggling,” and renters haven’t been able to translate housing wealth into ownership. He describes the current market as a crisis because momentum isn’t moving; Americans feel stuck.
Inventory ticked down in January compared with December but still sits 3.4% higher than a year earlier. At month’s end, there were about 1.22 million homes available for sale, equating to roughly a 3.7-month supply at the current sales pace. A six-month supply is typically viewed as a balanced market between buyers and sellers.
Tighter supply helped keep prices in positive terrain. The median price of homes sold in January was $396,800, up 0.9% from a year earlier and marking the highest January median on record. Yun notes that homeowners are financially comfortable as a result, estimating that since January 2020 a typical homeowner has accumulated about $130,500 in housing wealth.
Homes are staying on the market longer, with January’s average days on market at 46, up from 41 in January 2025. First-time buyers accounted for about 31% of sales, up from 28% a year ago.
Market activity remains strongest in the higher end of the price spectrum, with only the $1 million-plus segment showing a year-over-year gain. Demand dropped most sharply for homes priced below $250,000, underscoring the ongoing affordability and inventory challenges facing entry-level buyers.
If you’re considering buying or selling in today’s climate, the big questions to watch are: How will ongoing supply constraints interact with shifting rates and wage growth? Will more homes come on the market to relieve bidding pressure, or will demand stay more restrained? Share your take in the comments: Do you see this as a sustainable trend, or will conditions pivot in the coming months?
