Homebuyers continued to struggle in January as prices sharply rose and the number of home sales in the United States dwindled. Elevated prices have limited many buyers’ ability to purchase homes.

The Data: Sales of previously owned homes fell 4.9% from December to January, according to CNBC, citing the National Association of Realtors. The current level is nearly a 15-year-low for January. The median home price was $396,900, 4.8% higher than last year and the highest price ever for January.

"Mortgage rates have refused to budge for several months despite multiple rounds of short-term interest rate cuts by the Federal Reserve," Lawrence Yun, chief economist for the NAR, told CNBC. "When combined with elevated home prices, housing affordability remains a major challenge."

The average home for sale spent 41 days on the market in January, the longest average period since before the COVID-19 pandemic.

Purchasing with cash also remains popular amid a sustained period of high mortgage rates. All-cash offers comprised 29% of sales, down from 32% in 2024.

Why it Matters: Many observers have described the U.S. market as undergoing a crisis. Many reports have tied elevated prices to a lack of housing supply.

Beyond affordability, the ripple effects of high housing costs extend throughout the economy. Rising home prices can fuel rent increases, exacerbating financial strain on those unable to buy.

Some experts have called for regulatory changes, including zoning reforms to encourage new construction. Without intervention, affordability challenges may persist, making homeownership increasingly out of reach for younger buyers and middle-class families.

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Image created using artificial intelligence via Midjourney.