Sales of previously owned homes fell in January to the weakest pace since 1995, according to the National Association of Realtors.
The annualized rate came in at roughly 4 million units, down from a peak above 6.5 million during the pandemic buying frenzy.
For anyone who has been waiting for the housing market to "cool off," this is what cooling looks like.
Mortgage rates have hovered near 7% for months, more than double the sub-3% deals buyers locked in during 2020 and 2021.
A typical monthly payment on a median-priced home now runs hundreds of dollars higher than it did three years ago, even though prices in many markets have flattened or dipped slightly.
Higher rates hit purchasing power first, and inventory second.
Millions of homeowners who refinanced at ultra-low rates have little financial incentive to sell and take on a new loan at today's levels.
This "lock-in effect" keeps fewer homes on the market, which props up prices even as demand weakens.
Builders have tried to fill the gap with new construction, but they can't offset the missing resale supply on their own.
For buyers, the practical takeaway is mixed.
There is less competition than in 2021, meaning fewer bidding wars and more room to negotiate on inspection repairs or closing costs.
Sellers, meanwhile, are discovering that the sky-high prices of two years ago may no longer be realistic.
Homes that sit on the market for 60 days or more are increasingly common in parts of the Midwest and South.
When for-sale inventory is tight, would-be buyers stay in rentals longer, which keeps upward pressure on rents in many metro areas.
Landlords in markets like Phoenix and Austin have seen new apartment supply soften rent growth, but that relief is uneven across the country.
The bigger question is what happens next.
If mortgage rates slide toward 6% later this year, as some economists expect, a wave of sidelined buyers could re-enter the market quickly.
If rates stay put, expect more of the same: slow sales, stubborn prices, and a market that neither crashes nor booms.
Our take: this isn't a housing collapse, it's a standoff.
Buyers waiting for a dramatic price crash may be waiting a long time, while sellers clinging to 2021 pricing could watch their listings go stale.
Final Thoughts
The smart move for either side is to price and budget for the market that exists, not the one that just ended.