Factors behind the stagnation of the USA housing market

The Pending Home Sales Index—which reflects purchase contracts and serves as a leading indicator of finalized transactions—recorded a decline of 0.8% compared with December and 0.4% on an annual basis.

Weather and Interest Rates Keep Demand Low

Adverse weather conditions partly explain the weak performance, as prolonged cold and winter storms affected much of the country. However, even in regions with severe weather, such as the Midwest, the highest monthly increase was observed (+5%), while the West also saw growth (+4.3%).

At the same time, the easing of mortgage rates toward 6% expands the pool of potential buyers. According to Lawrence Yun, Chief Economist at National Association of REALTORS, approximately 5.5 million additional households are now eligible for a mortgage compared with last year, when rates hovered near 7%.

However, Yun notes that the activation of these buyers is not immediate. Historical data suggests that roughly 10% of them may enter the market, potentially adding up to 550,000 additional buyers in 2026 compared with 2025.

Limited Supply and Risk of Further Price Increases

Housing inventory remains constrained. Available homes for sale decreased by 0.8% compared with December and rose by just 3.4% on an annual basis, slowing the double-digit inventory growth recorded in 2024.

Yun warns that if supply does not increase, the return of more buyers could drive prices up again, putting pressure on affordability. In this context, a positive development is the passage of the “Housing for the 21st Century Act” by the U.S. House of Representatives, which aims to boost construction activity and reduce barriers to homeownership.

According to Realtor.com, the U.S. housing deficit approaches 4 million units, based on demographic demand.

Record Prices but Slower Growth

Home prices continue to rise, albeit at a slower pace. The National Association of REALTORS reported that the median price of existing homes reached a record high of $396,800 in January. Additionally, 73% of the 230 metropolitan areas recorded year-over-year price growth in Q4 2025.

Rising prices have also significantly increased homeowners’ net wealth: since January 2020, the average homeowner has accumulated approximately $130,500 in additional housing wealth.

Markets with the Highest Increases in Pending Sales

Despite the overall decline, several markets posted strong year-over-year growth in pending home sales in January:

• Phoenix – Mesa – Chandler: +11.8%
• Boston – Cambridge – Newton: +10.7%
• Charlotte – Concord – Gastonia: +10.7%
• San Francisco – Oakland – Fremont: +8.9%
• Oklahoma City: +8.7%
• St. Louis: +8%
• Virginia Beach – Chesapeake – Norfolk: +7.6%
• San Diego – Chula Vista – Carlsbad: +7.5%
• San Antonio – New Braunfels: +7.4%
• Miami – Fort Lauderdale – West Palm Beach: +6.8%