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US Housing Market Cools: Sales Plummet, Prices Fall

  //house-home.news-articles.net/content/2026/02/1 .. sing-market-cools-sales-plummet-prices-fall.html
  Published in House and Home on Thursday, February 12th 2026 at 10:45 GMT by Seeking Alpha
      Locale: N/A, UNITED STATES

Washington D.C. - February 12th, 2026 - The U.S. housing market demonstrated a clear cooling trend in January, with existing-home sales experiencing a steeper decline than analysts predicted and the median home price falling below the crucial $400,000 mark for the first time in over a year. Data released today by the National Association of Realtors (NAR) paints a picture of a market adjusting to persistent high mortgage rates and lingering economic anxieties.

Existing-home sales dropped by 4% compared to December and plummeted 17% year-over-year, reaching a seasonally adjusted level of 3.52 million. This substantial decrease underscores the growing challenges faced by prospective homebuyers. Simultaneously, the median existing-home price landed at $379,900, representing a 4.4% decrease from January 2025. While still above pre-pandemic levels, this dip signifies a potential turning point after years of unprecedented price appreciation.

Lawrence Yun, NAR's Vice President and Chief Economist, explained the current dynamic. "Despite falling, inventory is still stubbornly low," he stated. "Homebuyers are still having to do a dance to get a home, and some are getting frustrated." This 'dance' refers to the ongoing competition, driven by limited supply, even as demand softens. The report reveals 1.42 million units of existing homes were available for sale in January - a positive increase from the 1.27 million units recorded a year prior, but still considerably below pre-pandemic norms. This suggests that while the situation is improving in terms of available homes, it's not improving quickly enough to meet buyer expectations or significantly ease price pressures.

The data provides a vital snapshot of the housing market's health, confirming what many economists have suspected: the era of ultra-low interest rates and rapidly escalating home prices is definitively over. The primary driver of this slowdown is the rise in mortgage rates, which have more than doubled from their historic lows in 2020 and 2021. Coupled with broader economic uncertainty stemming from global events and concerns about a potential recession, prospective buyers are adopting a more cautious approach.

However, experts are quick to point out that this isn't a housing crash. "The market is cooling, but not collapsing," Yun emphasized. The median home price, while down year-over-year, remains significantly higher than it was before the pandemic, and many regional markets continue to exhibit competitive conditions, particularly for desirable properties in prime locations. The current inventory translates to approximately 3.0 months of supply, still indicating a seller's market, albeit a moderating one.

Looking ahead, the NAR anticipates a gradual increase in housing inventory throughout 2026, though not a dramatic surge. This improvement will be crucial in rebalancing the market and providing buyers with more options. A key factor influencing this trajectory will be the Federal Reserve's monetary policy. Economists widely predict that the Fed will begin to lower interest rates later this year, potentially providing a boost to housing affordability and stimulating demand. However, Yun cautions that the overall economic landscape remains unpredictable.

Beyond the Numbers: A Deeper Dive

The slowdown isn't uniform across all housing types. The report highlighted that sales of single-family homes decreased by 3.8% month-over-month, while sales of condominiums and co-ops fell by 5.4%. This suggests that higher-density housing may be experiencing a more pronounced impact from economic headwinds. Furthermore, regional variations are significant. The South and West, previously hot markets, have seen the most substantial declines in sales, while the Northeast and Midwest have shown relative resilience.

The declining affordability is disproportionately impacting first-time homebuyers, who are particularly sensitive to changes in mortgage rates and home prices. This group, which traditionally fuels a significant portion of housing demand, is now facing a daunting challenge in entering the market. Government programs and incentives aimed at increasing homeownership may become increasingly important in supporting this segment of the population.

Ultimately, the direction of the housing market in 2026 will hinge on a complex interplay of factors. The health of the overall economy, the trajectory of interest rates, and the pace of inventory growth will all play a critical role. While the January data indicates a cooling trend, the market remains dynamic and subject to change. Continued monitoring of these key indicators will be essential for understanding the evolving landscape of the U.S. housing market.