While 2026 has been shaping up so far as a distinct improvement in the housing market, lingering affordability and housing inventory issues continue to hold some buyers back from the market, according to the latest data from the National Association of Realtors® (NAR).
NAR’s latest Pending Home Sales Report for January found that sales decreased 0.8% from December and 0.4% from last year, a much slower rate of depreciation than the 9.3% monthly drop and 3% yearly drop seen in December.
NAR Chief Economist Lawrence Yun noted that while affordability conditions have improved, they have yet to “induce more buying activity,” hence a fall—albeit a slower one—in sales in January. Bright MLS Chief Economist Lisa Sturtevant also pointed to heavy winter weather throughout the month as a factor for slower sales.
“With mortgage rates nearing 6%, an additional 5.5 million households that could not qualify for a mortgage one year ago would qualify at today’s lower rates,” Yun continued. “Most newly qualifying households do not act immediately, but based on past experience, about 10% could enter the market—potentially adding roughly 550,000 new homebuyers this year compared with last year.”
Regionally there were very mixed results. The Midwest saw a 5% increase month-over-month, but a 3.3% decrease year-over-year. Pending sales in the South fell 4.5% month-over-month, but increased 4% year-over-year. The West was the only region to see increases both month-over-month and year-over-year at 4.3% and 0.3%, respectively. On the other hand, the Northeast was the only region to see decreases both month-over-month and year-over-year at 5.7% and 8.3%, respectively.
Sturtevant noted that a lack of supply contributes to drops in some markets, as “sales were down year-over-year in the Midwest and Northeast where supply is lowest.”
Realtor.com® Senior Economic Research Analyst Hannah Jones agreed with Sturtevant’s sentiment, adding that “buyers continue to gravitate toward markets with relatively affordable homes or more abundant inventory.”
“Many Southern and Western markets still have inventory levels above pre-pandemic norms, while much of the Midwest and Northeast face persistently tight supply,” she continued. “However, inventory gains have stalled or reversed in parts of the South and West, as softer demand has prompted some sellers to delay listing or pull their homes off the market ahead of the spring season.”
Among the 50 largest metro areas, the 10 with the largest year-over-year increases were mostly concentrated in the South, with a few Western standouts and a single Northeast inclusion:
- Phoenix, Arizona (+11.8%)
- Boston, Massachusetts (+10.7%)
- Charlotte, North Carolina (+10.7%)
- San Francisco, California (+8.9%)
- Oklahoma City, Oklahoma (+8.7%)
- St. Louis, Missouri (+8.0%)
- Virginia Beach, Virginia (+7.6%)
- San Diego, California (+7.5%)
- San Antonio, Texas (+7.4%)
- Miami, Florida (+6.8%)
Looking ahead, Yun said that without an increase in supply, “these additional potential buyers becoming active in the market could simply push up home prices.”
“This will put increasing pressure on affordability, which is why it is critical to increase supply by building more homes,” he said.
However, Yun noted that there is legislation in the works to address housing shortages, specifically pointing to the House of Representatives’ recent passing of the Housing for the 21st Century Act, a bipartisan bill with the goal to increase housing supply in the U.S. through removing certain building and lending regulations as well as adjusting certain programs overseen by the Department of Housing and Urban Development (HUD).
“The legislation is a meaningful step toward expanding housing supply and removing barriers that make it harder for Americans to achieve homeownership,” he said.
Sturtevant added that as spring comes, the market should pick up, as “(s)pring is typically the busiest market when homes sell the quickest and offers come in at or above list price.”
She also noted that buyers this year will “have more leverage than they have had in recent years,” and that “sellers will need to get their home ‘move-in ready’ and priced appropriately if they want a quick sale.”
