Existing-Home Sales Drop 8.4% in January, Even as Affordability Improves: What It Means for Spring 2026

What the January sales report actually said

Existing-home sales started 2026 with a downside surprise. The National Association of REALTORS® (NAR) reported that January sales fell **8.4% month over month** to a **3.91 million** seasonally adjusted annual rate (SAAR), and were down **4.4% year over year**. [nar.realtor]

Inventory remains the key constraint. NAR put total housing inventory at **1.22 million units**, which works out to **3.7 months of supply** at the current sales pace. That’s still below what many analysts consider a balanced market. [nar.realtor]

On prices, the national median existing-home price was **$396,800**, up **0.9%** from a year earlier—another reminder that a sales slowdown doesn’t automatically translate into immediate price relief when resale supply is thin. [nar.realtor]

Why affordability is improving (even if it doesn’t feel like it)

The notable counterpoint in the NAR release: affordability is improving steadily. NAR’s **Housing Affordability Index** rose to **116.5 in January**, up from **111.6 in December** and **102.0 a year ago**, marking the **seventh consecutive monthly improvement** and the best level since **March 2022**. [nar.realtor]

Two forces are doing the work: (1) mortgage rates have moved down from their prior highs and are lower than a year ago, and (2) wage growth has outpaced home price growth in recent months. The combination reduces the payment burden for buyers—even if headline prices are still near records. [nar.realtor][eyeonhousing.org]

A separate affordability lens from TD Economics highlights just how far the market moved away from “typical” affordability after 2021. Using the Atlanta Fed’s Home Ownership Affordability Monitor (HOAM), TD notes that the most recent reading it cites (October 2025) put the share of income needed for housing at **43%** for a median-income household—well above the classic 30% benchmark. [stories.td.com]

Tight inventory vs. slower demand: who has leverage now?

Even with tight resale inventory in the NAR data, buyers appear to be slowing down and taking more time to negotiate. The NAHB’s Eye On Housing recap of the NAR report notes homes spent a **median 46 days** on the market in January (up from 39 days in December). It also highlights a higher first-time buyer share and a slightly lower all-cash share—suggesting some rate-sensitive demand is still present when payments ease. [eyeonhousing.org]

Weekly indicators point in a similar direction. Redfin reports that pending home sales were down **5.1% year over year** (four weeks ending Feb. 8) and that the typical home was taking **66 days** to go under contract—its longest span in years. Redfin also reported **5.5 months of supply** in its weekly data window, signaling more buyer leverage than the national NAR snapshot suggests (the two series measure supply differently and cover different time windows). [redfin.com]

Redfin’s dashboard also pegged the weekly average 30-year fixed rate at **6.11%** (week ending Feb. 5), reinforcing that the payment environment has improved from last year even if it’s not “cheap” by 2020–2021 standards. [redfin.com]

What to watch into spring 2026

If affordability is improving but sales are still slipping, the next swing factor is **fresh supply**. Watch whether new listings rise meaningfully as the spring season begins—because without more options, better affordability may simply bid up the homes that do hit the market.

Also watch how local markets diverge. Even in a slow national tape, metro-level conditions can vary widely based on job growth, new construction, and how much pandemic-era price growth a region is still digesting.

Bottom line: January’s sales drop is real, but the affordability trend is the more important story for buyers and sellers planning for spring. If rates stay near the low-6% range and listings improve, transaction volume can recover without requiring a major price reset. [nar.realtor][redfin.com]