The U.S. housing market continues to struggle under pressure from high prices, limited supply and weak consumer confidence, prompting economists to warn of worsening structural imbalances.
Sales of previously owned homes in January fell 8.4% from December to a seasonally adjusted annual pace of 3.91 million, marking the weakest activity since December 2023, according to reports.
Compared with January 2025, transactions declined 4.4%, representing the largest monthly drop since early 2022 and highlighting fragile buyer sentiment nationwide.
These closings largely reflected contracts signed during late autumn when mortgage rates stabilised before easing slightly to about 6.1% in January.
The South and West regions experienced the steepest declines, reinforcing concerns that affordability challenges remain uneven across different housing markets.
Economists Describe A Stalled Market
Lawrence Yun called the situation “a new housing crisis” as market mobility remains restricted despite modest affordability improvements.
“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.
He added that wage growth and slightly lower mortgage rates have helped but insufficient supply continues limiting real market recovery.
During remarks to reporters he emphasised that potential buyers are “still struggling,” and “renters are not participating in housing wealth.”
He concluded the slowdown represents stagnation because “the movement is not happening. Americans are stuck.”
Inventory And Pricing Trends
Inventory slipped month-to-month but remained 3.4% higher than a year earlier, with 1.22 million homes available nationally at the end of January.
At current sales pace this equates to a 3.7-month supply, well below the six-month level typically associated with a balanced housing market.
Limited availability kept prices rising, with the median January home reaching a record $396,800 for the month, up 0.9% annually.
“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.
Properties now take longer to sell at 46 days compared with 41 days a year ago, while first-time buyer participation rose to 31%.
Demand remains strongest among higher-priced homes above $1 million, while the sub-$250,000 segment recorded the sharpest annual decline.