US Existing Home Sales fall 8.4% in Jan 2026, rates above 6%

Why U.S. existing home sales fell 8.4% in January 2026

U.S. existing home sales fell 8.4% month over month in January 2026, versus a 3.4% decline expected and a 5.1% gain in December, as reported by Investing.com. The miss suggests both temporary disruptions and persistent headwinds are at play. The figures indicate a weaker-than-anticipated start to the year.

Two forces likely drove the decline: harsh winter weather constrained showings and closings, and affordability pressures continued to cool demand. Mortgage rates above 6% and elevated prices kept many buyers sidelined, while lean inventory curbed transactions. The combination amplified January seasonality into a sharper monthly drop.

Immediate impact: affordability, mortgage rates above 6%, and the lock-in effect

Affordability remains the immediate constraint. With mortgage rates above 6%, monthly payments and debt-to-income hurdles restrict purchasing power, and the lock-in effect keeps would-be sellers with ultra-low rates from listing. That dynamic suppresses inventory, limits choice, and slows sales until financing costs ease.

“The decrease in sales is disappointing … [and] harsh winter weather likely made homebuying activity difficult, making it harder than usual to infer whether the drop signals a true weakening or is an outlier,” said Lawrence Yun, chief economist, as reported by the Associated Press. That assessment underscores both transient weather effects and persistent affordability constraints.

2026 outlook: what buyers and sellers should watch

J.P. Morgan Global Research expects a gradual improvement in sales through 2026, with national prices roughly flat as modest demand meets incremental supply and the lock-in effect persists. They flag elevated fixed mortgage rates and homeowner rate lock-in as ongoing drags on turnover.

Zillow economists project a modest rebound, with existing-home sales around 4.26 million in 2026, roughly 4.3% above 2025, assuming mortgage rates remain above 6% but stable. They also anticipate slight price growth alongside more inventory and steadier demand.

Affordability path: mortgage rates above 6% and the lock-in effect

Sustained mortgage rates above 6% raise monthly payments relative to income, tightening underwriting ratios and reducing eligibility. At the same time, lock-in dampens new listings as owners with sub-4% loans avoid trading up, shrinking supply and turnover.

If rates ease and inventory builds, affordability could improve and sales may stabilize, but the timeline depends on financing costs and seller participation. Until then, pricing power may vary by micro-market as buyers and sellers recalibrate.

Authoritative context: NAR/Lawrence Yun, J.P. Morgan, Zillow outlook cues

The trade association’s economist frames January’s decline as potentially weather-skewed, while reiterating that high rates, prices, and shortages still restrain activity. Global bank research points to gradual improvement with near-flat prices if supply and demand rebalance only slowly.

Forecasts from a major listing portal’s economists anticipate more transactions in 2026 with rates above 6% and modest price gains, contingent on steadier affordability and inventory additions. Together, these views imply a cautious uptrend rather than a rapid recovery.