Home sales in January fell more than 8% as potential buyers struggled

High home prices, weak supply, and weak consumer confidence in the economy continue to weigh on the US housing market.

Sales of previously owned homes in January fell a wider-than-expected 8.4% from December to a seasonally adjusted annual rate of 3.91 million, according to the National Association of Realtors. Sales were 4.4% lower than in January 2025. This is the slowest pace since December 2023.

That number is based on closings, so contracts likely would have been signed in November and December, when the average 30-year fixed mortgage rate didn’t move much before falling slightly in January. That rate now stands at 6.1%, according to Mortgage News Daily.

Regionally, sales declined across the country month-over-month, but declined more in the South and West.

“Affordability conditions are improving, with the NAR’s Housing Affordability Index showing that housing is the least expensive since March 2022,” Lawrence Yun, NAR’s chief economist, said in a statement. “This is because wage gains are outpacing house price growth and mortgage rates are lower than they were a year ago. However, supply has not kept up with the pace of growth and remains very low.”

He also noted in a call with reporters that potential buyers are “still struggling.”

Inventory was down compared to December but was still up 3.4% year over year. There were 1.22 million homes for sale at the end of January, which represents a 3.7-month supply at the current sales pace. A six-month supply is considered a balanced market between buyer and seller.

Low supply has kept home prices in positive territory. The median price of a home sold in January was $396,800, up 0.9% year over year and the highest January price ever.

“Homeowners are in a comfortable financial position as a result. Since January 2020, the average homeowner has accumulated $130,500 in housing wealth,” Yoon added.

Homes are taking longer to sell, reaching 46 days this January compared to 41 days in January last year. About 31% of sales were to first-time buyers, up from 28% a year ago.

Sales remain stronger at the higher end of the market; In fact, the only positive price segment compared to last year was the $1 million-plus range. Sales declined the most for homes priced under $250,000.