The U.S. housing market is facing challenges with high home prices, dwindling supply, and decreased consumer confidence. Sales of previously owned homes in January dropped by 8.4% from December to 3.91 million, the slowest pace since December 2023. Mortgage rates are now at 6.1%, with sales decreasing the most in the South and West.

Inventory decreased in January but was up 3.4% year over year, with 1.22 million homes for sale. The median home price in January was $396,800, up 0.9% year over year. Homes are taking longer to sell, with 31% of sales to first-time buyers. The $1 million-plus range saw the only increase in sales.

NAR’s Housing Affordability Index shows that housing is the most affordable since March 2022, due to wage gains and lower mortgage rates. However, Chief Economist Lawrence Yun warns of a housing crisis as potential buyers and renters are struggling. Homeowners have accumulated $130,500 in housing wealth since January 2020.

Read more at CNBC: January home sales tank more than 8% with potential buyers struggling