Home sales hit 16-month lows but stable rates offer hope
Sales of existing homes disappointed in January, but is the cold start to the year a sign of what lies ahead? We saw two key macroeconomic indicators this week: the jobs report and inflation as measured by the Consumer Price Index (CPI).
In January’s jobs data, we saw a revision that put average job growth in 2025 at just 15,000 per month (down from almost 50,000). The significant downgrade was widely expected, so while large it was not a shock.
Even more surprising was the improvement we saw. The unemployment rate fell from last month as employers added 130,000 jobs – almost nine times as many as in a normal month in 2025. Average hourly wages also rose (3.7% – in line with last month). On the internet, the jobs report was one of the relatively good signals this week.
Meanwhile, inflation fell in January, to 2.4% overall and 2.5% for ‘core’ inflation, a subset that excludes noisy food and energy prices and is often considered a good gauge of underlying price pressures.
While still above target, core inflation is at its lowest level since March 2021. Overall, neither employment nor inflation data were enough to change market expectations that the Federal Reserve will leave its policy rate unchanged in March, but it is encouraging to see both key indicators moving in the desired direction.
Reflecting the stability in monetary expectations, mortgage rates were again quite stable, down 2 basis points and in the narrow range of just above 6% for a seventh consecutive week. This bodes well for the upcoming spring buying season for home buyers and sellers.
But it’s worth noting that recent housing data has been a mixed bag at best.
Existing home sales in January were disappointing, falling from both the previous month and the previous year to a 16-month low. Severe winter weather undoubtedly played a strong role, but the weakness was spread across all four regions and upcoming December home sales were also weak, so it’s not just the weather. However, home sales are trending backwards and there are still some reasons for optimism, including stable mortgage rates.
Looking at Realtor.com®’s weekly home data, we see some improvement over last week’s snow-packed new listings, but they still lagged the previous year, indicating sellers got off to a slow start. This hampered overall listing growth, which slowed. Interestingly, asking prices remain relatively soft, and this theme is echoed in two additional Realtor.com reports this week.
According to the latest New Construction Insights report, sales prices for both new and existing homes were relatively stable in the fourth quarter of 2025. In addition, the report found that almost 1 in 5 new homes reduced prices, more than the first time in recent years in the resale market.
This is not just a reflection of price weakness in the West and South, where many new homes are being built. It suggests that builders are competing more directly on price to keep sales moving, even as the average asking price itself remains relatively stable.
January’s Luxury Trends report found that the luxury market started the year on a softer footing rather than with a bang, with prices for luxury items slightly lower. The report also compares old and new luxury markets, finding that old homes on the coast are smaller, while newer luxury markets – many in the South – offered buyers more room for their money.
Finally, January’s Hottest Markets report found that Kenosha, Wisconsin, earned the top spot with the typical urban home experiencing strong demand; it had more than three times as many page views as an average home across the country.
Of the 40 largest markets, Kansas City, MO, the Midwest, saw the biggest jump in the past year, indicating that real estate markets in the Midwest remain more competitive for buyers than many other areas.
