Realtors have sounded the alarm over a potential “new housing crisis” after home sales fell by over 8 percent in January, the biggest monthly drop since 2022.
“Improving affordability should have brought more people to the market,” said Lawrence Yun, chief economist at the National Association of Realtors.
“The sentiment about the economy is not there, and of course home buying does require some degree of people’s comfort levels, confidence, to enter the market.”
“It’s still a buyer’s market, but it might not be for long,” added Sue Dhillon, a Redfin Premier agent in Seattle. “House hunters are getting a jump start on the spring selling season because they’re doing the math and realizing that a few things are working in their favor.”
Sales of previously owned homes last month fell by 8.4 percent overall from December, a much heavier drop than expected, and a seasonally adjusted annual rate of 3.91 million, according to the NAR. This was down 4.4 percent compared with January 2025.
The decline was more unexpected following three out of four months of rising sales which raised expectations that the housing market could start to improve.
As a result, economists who spoke to The Wall Street Journal had predicted a smaller decrease of 4.6 percent – though suggested that adverse weather and low confidence in the market may have had an impact.
Elevated prices of homes and a decrease in the number of properties may also have played a role in the sharp decrease of sales, the outlet reported. The national median existing-home price rose to $396,800 in January, a 0.9 percent increase year-on-year, according to the NAR.
But realtors warn buyers not to be put off.
“Sellers are pricing lower, mortgage rates have come down slightly and aren’t likely to drop further any time soon, and rents just keep climbing,” Dhillon added. “If buyers wait any longer, competition is likely to pick up.”
Yun agreed, adding: “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.”
But Yun also noted that potential buyers are “still struggling,” and “renters are not participating in housing wealth,” according to CNBC. He characterized the current market as a crisis because “the movement is not happening. Americans are stuck.”
The coming months are likely to be an indicator of whether the market will recover with spring typically the time of year where home sales are highest.