U.S. Housing Market Faces 'New Crisis' Amid Stagnant Sales

High home prices, limited supply, and reduced consumer confidence continue to affect the U.S. housing market. Lawrence Yun, chief economist for the National Association of Realtors (NAR), has referred to the situation as "a new housing crisis."

Sales Decline and Market Slowdown

Sales of previously owned homes decreased by 8.4% from December to January, reaching a seasonally adjusted annual rate of 3.91 million. This represents the slowest pace since December 2023 and the largest monthly decline since February 2022. Sales in January were 4.4% lower than in January of the previous year.

The sales figures are based on closings, which typically correspond to contracts signed in the preceding two months. During November and December, the average rate on a 30-year fixed mortgage remained largely stable before a slight drop in January. The current average rate stands at 6.1%, according to Mortgage News Daily.

Regionally, sales experienced month-to-month declines across the nation, with the most significant reductions observed in the South and West.

Affordability Improves, But Supply Lags

Yun stated that housing affordability conditions are improving, with NAR's Housing Affordability Index indicating the most favorable conditions since March 2022. He attributed this to wage gains outpacing home price growth and mortgage rates being lower compared to a year ago.

However, he also highlighted that housing supply has not kept pace with demand and remains low.

The 'Stuck' Market: A Crisis of Movement

During a call with reporters, Yun also noted that potential buyers are "still struggling" and that "renters are not participating in housing wealth." He characterized the current market as a crisis due to a lack of movement.

Yun concluded, stating that "Americans are stuck."