High home prices, a lack of supply and weakening consumer confidence in the economy continue to weigh on the U.S. housing market. Lawrence Yun, chief economist for the National Association of Realtors, called it “a new housing crisis.”

According to NAR data, second-hand home sales in January fell 8.4% from December, a far greater than expected decline, to a seasonally adjusted annualized rate of 3.91 million units. Sales were down 4.4% from January 2025. This was the slowest increase since December 2023 and the largest monthly decline since February 2022.

This count is based on volume, so contracts that were likely signed in November and December, when the average rate on a 30-year fixed mortgage didn’t change much before falling slightly in January. According to Mortgage News Daily, the rate is currently 6.1%.

From a regional perspective, sales dropped month-on-month across the country, but the biggest declines were seen in the South and West.

“Affordability conditions are improving, with NAR’s Housing Affordability Index showing housing is the most affordable since March 2022,” Yun said in a release. “This is due to wage growth outpacing home price growth and mortgage rates lower than a year ago. However, supply has not kept pace and remains quite low.”

But he also pointed out in a phone interview with reporters that potential buyers are “still struggling” and “renters are not participating in the housing wealth.” He described the current market as a crisis because “the movement is not happening. Americans are in trouble.”

Inventories in January were lower than in December, but still increased by 3.4% year-on-year. As of the end of January, there were 1.22 million homes for sale, which at the current sales pace would provide a 3.7-month supply. A six-month supply is considered a balanced market between buyers and sellers.

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

“As a result, homeowners are in a comfortable position financially. The typical homeowner will have accumulated $130,500 in housing wealth since January 2020,” Yun added.

Homes are taking longer to sell, with 46 days in January and 41 days in January 2025. About 31% of sales were to first-time homebuyers, up from 28% a year ago.

Sales at the high end of the market continue to be strong; in fact, the only price range to see positive changes compared to a year ago is the $1 million-plus range. Sales of homes priced under $250,000 fell the most.