Existing-Home Sales Slumped in January 2026 Even as Affordability Improved: What the Data Says

What happened in January: sales down, pace slows

January was a reminder that the housing market can look “better” on a payment calculator and still feel frozen in real life. The National Association of REALTORS® (NAR) reported that existing-home sales fell 8.4% month over month to a seasonally adjusted annual rate of 3.91 million, down 4.4% from a year earlier.[nar.realtor]

NAR’s regional breakdown showed declines across the board, with the West seeing the biggest monthly drop and also a year-over-year price decline—an early sign that the market is not moving in lockstep.[nar.realtor]

Affordability improved, but not enough to spark demand

NAR’s Housing Affordability Index rose to 116.5 in January (up from 111.6 in December and 102.0 a year earlier), marking a seventh consecutive monthly improvement.[nar.realtor]

One driver: mortgage rates were lower than a year ago. NAR cited an average 30-year fixed mortgage rate of 6.10% in January, down from 6.96% one year earlier (per Freddie Mac).[nar.realtor]

So why didn’t improved affordability translate into more closings? The answer is that affordability is necessary, not sufficient. Buyers also need enough choices, realistic pricing, and confidence that they aren’t competing against severe scarcity.

Inventory remains the choke point

NAR reported total housing inventory of 1.22 million units in January—down 0.8% from December but up 3.4% year over year. Months of supply rose to 3.7 months.[nar.realtor]

Even with that modest year-over-year improvement, inventory levels remain historically tight. The NAHB’s Eye On Housing analysis emphasized that limited resale supply continued to keep many buyers on the sidelines, even as mortgage rates trended lower and wage growth outpaced price gains.[eyeonhousing.org]

Market “friction” is showing up in how long listings take to move. NAR’s Realtors® Confidence Index data showed a 46-day median time on market, up from 41 days a year earlier.[nar.realtor]

What it means for buyers, sellers, and investors

**Buyers:** The affordability trend is moving in the right direction, but you’ll likely see the biggest opportunity where inventory is expanding and price growth has cooled. Pay attention to days on market and the share of listings with price cuts in your metro rather than relying on the national headline number.

**Sellers:** The market still rewards well-priced, well-presented homes—but timelines may be longer and negotiations more common than in prior years.

**Investors:** NAR’s data showed the share of individual investors/second-home buyers at 16% in January (down from 17% a year earlier). If your strategy depends on quick liquidity, factor in slower turnover and a narrower buyer pool.[nar.realtor]

A practical spring 2026 watchlist

• Whether inventory builds beyond the low 3–4 months range
• Whether mortgage rates hold near recent averages
• Whether affordability gains persist if prices stabilize or re-accelerate

The bottom line: affordability is improving on paper, but transactions won’t meaningfully rebound until supply loosens and buyers feel they have enough options to act.[nar.realtor]