Realtors Report a 'New Housing Crisis' As January Home Sales Tank More than 8%

Why It Matters

The sales slump signals weakening demand amid high rates and limited supply, threatening price growth and market balance. Investors, builders, and policymakers must monitor these dynamics as they shape housing wealth and economic stability.

Key Takeaways

• January existing-home sales fell 8.4% month‑over‑month.
• Median home price hit $396,800, highest January ever.
• Inventory rose 3.4% YoY, still low supply.
• Mortgage rates at 6.1% pressure buyers.
• First‑time buyer share rose to 31%.

Pulse Analysis

The latest dip in U.S. home sales reflects a confluence of macro‑economic pressures that extend beyond seasonal fluctuations. While consumer confidence has eroded, wage growth has modestly outpaced price appreciation, keeping the Housing Affordability Index at its most favorable level since early 2022. Yet, the prevailing 30‑year mortgage rate of 6.1% remains a significant hurdle, especially for first‑time buyers who now account for just over 30% of transactions. This rate environment, coupled with lingering inflation concerns, dampens buyer enthusiasm and translates into longer listing periods and reduced transaction velocity.

Supply constraints continue to amplify price resilience despite the sales slowdown. Inventory levels, though up 3.4% year‑over‑year, represent only a 3.7‑month supply—well below the six‑month benchmark for a balanced market. Builders face material cost volatility and labor shortages, limiting new construction and reinforcing the scarcity of affordable units. Consequently, the median home price surged to $396,800, setting a new January record and widening the wealth gap between homeowners and renters. Homeowners who entered the market before 2020 have accumulated roughly $130,500 in equity, underscoring the growing disparity in housing wealth.

Looking ahead, market participants must navigate a delicate equilibrium between price stability and affordability. Policymakers may consider targeted incentives to boost entry‑level inventory, while lenders could explore flexible underwriting to accommodate higher‑rate environments. For buyers, strategic timing—such as leveraging seasonal price dips and negotiating longer closing windows—may mitigate rate exposure. Sellers, meanwhile, should price competitively and highlight value‑added features to attract a cautious buyer pool. The trajectory of the so‑called "new housing crisis" will hinge on how quickly supply can respond to demand and whether mortgage rates retreat from current levels.

Realtors report a 'new housing crisis' as January home sales tank more than 8%

By Diana Olick · Published Thu, Feb 12 2026 10:00 AM EST · Updated Thu, Feb 12 2026 10:37 AM EST

Key Points

• Sales of previously owned homes in January dropped a wider‑than‑expected 8.4% from December.

• The median price for a home sold in January was $396,800, up 0.9% year over year and the highest January price on record.

• Inventory came down from December but was still up 3.4% year over year.

---

High home prices, faltering supply and weaker consumer confidence in the economy all continue to weigh on the U.S. housing market. The chief economist for the National Association of Realtors, Lawrence Yun, is calling it “a new housing crisis.”

Sales of previously owned homes in January fell 8.4% from December to a seasonally adjusted, annualized rate of 3.91 million, according to the NAR. Sales were 4.4% lower than in January 2025, marking the slowest pace since December 2023 and the biggest monthly drop since February 2022.

The count is based on closings, so contracts likely signed in November and December—when the average rate on the 30‑year fixed mortgage was relatively stable—are reflected in the January figure. The mortgage rate is now 6.1%, according to Mortgage News Daily.

Regionally, sales fell across the nation month‑to‑month, with the biggest declines in the South and West.

“Affordability conditions are improving, with NAR’s Housing Affordability Index showing that housing is the most affordable it’s been since March 2022,” Yun said in a release. “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.”

He added that potential buyers are “still struggling,” and “renters are not participating in housing wealth.” Yun characterized the current market as a crisis because “the movement is not happening. Americans are stuck.”

Inventory came down in January from December but was still up 3.4% year over year. There were 1.22 million homes for sale at the end of January, which at the current sales pace represents a 3.7‑month supply (a six‑month supply is considered a balanced market).

Tighter supply kept home prices in positive territory. The median price for a home sold in January was $396,800, up 0.9% year over year and the highest January price on record.

“Homeowners are in a financially comfortable position as a result. Since January 2020, a typical homeowner would have accumulated $130,500 in housing wealth,” Yun added.

Homes are taking longer to sell, averaging 46 days in January versus 41 days in January 2025. About 31% of sales were to first‑time buyers, up from 28% a year ago.

Sales continue to be strongest on the higher end of the market; the only price segment that posted a year‑over‑year gain was the $1 million‑plus range. Sales dropped the most for homes priced below $250,000.