The National Association of Realtor’s Existing Home Sales Report paints a picture of high home prices, faltering supply, and weaker consumer confidence in the economy, all of which continue to weigh on the U.S. housing market.
In a call with reporters after the report’s release, Lawrence Yan, the Chief Economist for the NAR, called it “a new housing crisis.,” CNBC reported.
According to the report, 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. Sales were 4.4% lower than January 2025, the slowest pace since December 2023 and the biggest monthly drop since February 2022.
The Existing-Home Sales Report provides the real estate ecosystem—including agents, homebuyers and sellers—with data on the level of home sales, price, and inventory. Month-over-month and year-over-year sales fell in all regions.
Median Home Prices Reach New High
“The decrease in sales is disappointing. The below-normal temperatures and above-normal precipitation this January make it harder than usual to assess the underlying driver of the decrease and determine if this month’s numbers are an aberration,” Yan said in a release. “Affordability conditions are improving, with NAR’s Housing Affordability Index showing that housing is the most affordable it’s been since March 2022. 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.”
“Due to low supply, the median home price reached a new high for the month of January,” Yun added. “Homeowners are in a financially comfortable position as a result. Since January 2020, a typical homeowner would have accumulated $130,500 in housing wealth.”
But Yan noted on the 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.”
Affordability improved for the seventh consecutive month, according to NAR’s report, increasing to 116.5 in January from 111.6 in December and 102 a year ago.
Bankrate Housing Market Analyst Jeff Ostrowski examined the report and said that, “Home sales fell 4.4% from a year ago and 8.4% from a month ago, the National Association of Realtors reported Thursday. Existing home sales remain near historic lows — an annual pace of just 3.91 million deals in January 2026. For context, during the pandemic, home sales were well above 6 million a year, and a typical year before the pandemic saw more than 5 million sales.”
Home Prices Retreat in Some Areas
Tackling the issue of why the housing market is so sluggish, Ostrowski said: “Owners aren’t keen to put their homes on the market, as the mortgage rate lock-in effect remains in place and soft prices in some areas causes sellers to pull their homes off the market. And first-time buyers aren’t feeling motivated to jump in.”
Ostrowski noted that home prices are retreating in some areas.
“The State of the Housing Market: “During the pandemic, home prices soared, and affordability plummeted. That trend finally is easing. Home prices are retreating in formerly hot markets in Florida, Texas and elsewhere in the Sun Belt. However, many affordable areas in the Midwest and Rust Belt continue to experience price appreciation,” he said.
Ostrowski also noted where he thinks mortgage rates are headed.
“Mortgage rates are at their lowest levels since 2022. That’s mainly because inflation has eased and the job market has cooled. But mortgage rates seem unlikely to push below the 6% level in the near future,” he said.
Ostrowski’s advice for aspiring is: “If you’re emotionally and financially ready to buy, just do it – don’t get too caught up in the latest moves in home prices or mortgage rates. Make sure to research down payment assistance, and if you don’t have 20% to put down, don’t be afraid to buy with 5% or 10% down.”
