Homebuyers were likely dissuaded by extreme winter weather and shifting rates, causing existing-home sales to see a significant decline in January.
Existing-home sales dropped with the nation’s temperatures this January, declining by 8.4 percent on a monthly basis and by 4.4 percent on an annual basis, according to the National Association of Realtors (NAR).
An unusually wintery January across many parts of the country likely dissuaded some homebuyers, NAR Chief Economist Lawrence Yun said, which makes determining other economic causes of the sharp decline in sales a challenge.
Lawrence Yun | Chief Economist at the National Association of Realtors
“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,” Yun said in a statement.
“Affordability conditions are improving, with NAR’s Housing Affordability Index showing that housing is the most affordable it’s been since March 2022,” Yun continued. “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.”
Unsold inventory rose to 3.7 months of supply in January, up from 3.5 months in December and from the year prior. Total housing inventory, however, declined by a slight 0.8 percent from December to January to 1.22 million units.
Meanwhile, the median existing-home sale price inched up by 0.9 percent year over year to $396.800. Still, affordability improved across all regions, NAR reported, with the affordability index increasing to 116.5 in January, up from 111.6 the previous month and 102 the previous year.
“Due to low supply, the median home price reached a new high for the month of January,” Yun said. “Homeowners are in a financially comfortable position as a result. Since January 2020, a typical homeowner would have accumulated $130,500 in housing wealth.”
Single-family home sales suffered the most in January, declining by 9 percent month over month and 4.3 percent year over year. The median existing single-family home sales price was $400,300 in January, up 0.6 percent from the same time last year.
Condo and co-op sales declined by 2.6 percent on a monthly basis and 5 percent on an annual basis. The median sales price was $364,600, up 3.8 percent year over year.
Hesitancy by homebuyers in December while rates continued to move also contributed to the decline in home sales, Bright MLS Chief Economist Lisa Sturtevant said in a statement.
Dr. Lisa Sturtevant | Chief Economist at Bright MLS
“Closed sales generally represent contracts made in the 30 days prior,” Sturtevant said in an email to Inman. “Pending sales were slow in December even as mortgage rates dropped. Many buyers stayed on the sidelines, waiting not just for lower rates but also rate stability. Therefore, the January closed sales numbers are really reflecting conditions buyers encountered during December.”
“Buyers will find a more favorable market as we head into spring,” Sturtevant added. “More inventory, lower rates and slower price growth will give buyers more room for negotiation. Snowy weather in January could have delayed buyers a bit, but it is likely we will see more home shoppers out early this spring.”
Existing-home sales managed to increase on a monthly basis in the Northeast, the only region for which this occurred in January. Existing-home sales in the region rose by 5.9 percent month over month to an annual rate of 480,000, which was down 4 percent year over year. The median sales price for the region was up 5.8 percent year over year to $505,400.
Meanwhile, the Midwest, South and West all saw sharp monthly declines of 7.1 percent, 9 percent and 10.3 percent, respectively.
The Midwest hit an annual sales rate of 920,000, which was also down 7.1 percent year over year. The region’s median sales price was up 2.3 percent on an annual basis to $295,400.
The South saw an annual decline in sales of 1.6 percent to a rate of 1.81 million. The median sales price was $351,200, up 0.1 percent from January 2025.
The West saw an annual sales rate of 700,000, which was down 7.9 percent year over year. The median sales price declined 1.4 percent from January 2025 to $600,400.
Email Lillian Dickerson