Home Sales Drop Sharply in January as Prices Remain High, Running Near 15 Year Lows

The U.S. housing market is struggling as high mortgage rates, elevated prices, and low inventory keep many buyers on the sidelines. Home sales have dropped sharply, leaving realtors reporting weak buyer traffic.

Key Facts:

Sales of existing homes fell 4.9% in January from the prior month, exceeding analyst expectations of a 2.6% decline.
Mortgage rates remained stuck around 6% to 7%, making affordability a key issue.
Home inventory rose 17% from a year ago, but supply is still tight at just 3.5 months’ worth of homes.
The median home price hit $396,900 in January, a record high for the month and up 4.8% year-over-year.
First-time buyers made up only 28% of purchases, well below historical averages of 40%.

The Rest of The Story:

The housing market remains in a deep freeze, with sales of previously owned homes running at near 15-year lows despite a modest annual increase.

Mortgage rates, which had dropped slightly from their 2023 highs, remain stubbornly high, keeping many potential buyers out of the market.

Though inventory levels have increased, they are still too low to bring prices down significantly.

Higher-priced homes are selling better, with sales of $1 million+ homes rising 27% year-over-year, while lower-priced home sales continue to decline.

The affordability crisis is hitting first-time buyers particularly hard, and cash buyers still make up a large share of the market at 29%.

Realtors report that demand remains weak, with many sellers putting homes on the market only to find that buyers are scarce.

The monthly mortgage payment needed to buy the median priced home for sale in the US has nearly doubled over the last 5 years. This remains the most unaffordable housing market in history.

Video: https://t.co/UUYrzTs50Y pic.twitter.com/JEexTlEmbD

— Charlie Bilello (@charliebilello) February 18, 2025

Commentary:

The ongoing slump in home sales is a direct result of the disastrous economic policies under ex-president Biden.

His administration’s reckless spending fueled inflation, forcing the Federal Reserve to hike interest rates aggressively.

As a result, mortgage rates skyrocketed, making homeownership increasingly unattainable for the average American.

The Biden-era inflationary cycle crushed affordability, leaving many middle-class buyers priced out while the wealthier segment continues to thrive.

This divide is evident in the data—luxury homes are selling, while entry-level homes remain out of reach for first-time buyers.

Despite the Federal Reserve’s multiple interest rate cuts, mortgage rates have refused to budge.

This highlights how deeply embedded inflationary pressures have become due to the previous administration’s reckless policies.

Lawrence Yun of the National Association of Realtors noted that “both increased inventory and lower mortgage rates are necessary” to fix the market, but it will take more than that.

A pro-growth, pro-homeownership approach is needed to restore balance.

Thankfully, with Trump back in charge, there is hope for a turnaround.

His policies are expected to reduce inflation, stabilize interest rates, and restore economic confidence—key factors for reviving the housing market.

If his administration can deliver on tax cuts, regulatory relief, and energy independence, mortgage rates will drop, and affordability will improve.

The Bottom Line:

The U.S. housing market remains stuck in a deep freeze, with high mortgage rates and home prices squeezing out buyers.

The economic damage caused by Biden’s policies continues to ripple through the market, but with Trump back in office, relief may be on the way.

A return to pro-growth policies could finally bring mortgage rates down and get home sales moving again.