Affordability Up, Sales Down 8.4%: January Housing Math Doesn’t Balance

The National Association of Realtors’ release on February 12, 2026 trumpeted “improving affordability” and a “January record” for prices—while the market quietly stumbled. Despite the Housing Affordability Index rising to 116.5 and the 30-year mortgage rate dipping to 6.10%, existing-home sales fell 8.4% month over month to 3.91 million SAAR, with declines across every region. Days on market stretched to 46 (from 39), and months’ supply rose to 3.7 (from 3.5), signaling demand fatigue—not a supply squeeze.

Here’s what the data reveals:

• Sales fell 8.4% MoM and 4.4% YoY to 3.91 million SAAR—broad-based across regions

• Inventory rose 3.4% YoY to 1.22 million, and months’ supply increased to 3.7

• Median price hit a “January record” $396,800, but that’s below November’s $409,200

• Time on market lengthened to 46 days, confirming slower absorption despite “better affordability”

• Category header glitch: “Condominiums and Co-ops in December” appears inside a January release

By the numbers

Affordability Up, Activity Down: The Demand-Side Air Pocket

If affordability truly improved in a market-moving way, transactions and time-on-market would cooperate. They didn’t. With the affordability index at 116.5 and mortgage rates at 6.10%, existing-home sales still fell to 3.91 million SAAR (down 8.4% MoM, 4.4% YoY), and days on market climbed to 46 from 39.

• The mix hints at why: first-time buyer share nudged up to 31%, yet 27% of deals were still all-cash and 16% involved investors/second homes. Financed buyers remain boxed in by price levels and qualification standards.

• Affordability optics improved; affordability reality didn’t. Lower rates helped eligibility on paper, but not enough to coax hesitant sellers or clear stretched list prices.

The takeaway: this isn’t a supply-only story. It’s a demand deceleration visible in slower absorption and falling sales despite easier financing.

The “Low Supply” Rerun vs What Months’ Supply Says

NAR leaned on the familiar “supply remains quite low” refrain. But months’ supply tells the truth about balance—rising to 3.7 from 3.5 in December and from a year ago. Total inventory ticked down 0.8% MoM to 1.22 million, but is up 3.4% YoY. Rising months’ supply alongside falling units means demand weakened faster than inventory fell.

• Compare to November 2025: months’ supply was 4.2 then (and sales rose 0.5% MoM). Today’s 3.7 months looks tighter on paper, yet volumes just cratered 8.4% MoM with longer marketing times. It’s not tightness; it’s softness.

• Builders can buy down rates; homeowners don’t. New construction may keep siphoning share as resale sellers hold aspirational pricing while buyers hold the line on payments.

Low supply is part of the landscape. But this leg down is about a bid that’s thinning, not listings that are vanishing.

Weather Didn’t Do It: Breadth Beats the Forecast

The release cites “below-normal temperatures and above-normal precipitation.” Weather can bruise a print, but the breadth here argues otherwise:

• Month-over-month declines everywhere: Northeast -5.9%, Midwest -7.1%, South -9.0%, West -10.3%

• Year-over-year declines in all regions as well

When every region falls both MoM and YoY, you need more than a storm to explain it. The broader driver is rate-sensitive demand meeting stubborn pricing and limited negotiation.

Price Storytelling: January Record or Seasonal Comedown?

The median price is framed as a “new high for January” at $396,800—technically true and a 0.9% YoY gain, marking the 31st consecutive YoY increase. But November’s median was $409,200. That inconvenient comparison was left out.

• Prices are resilient because sellers are anchored, not because buyers are stampeding. The median held due to mix and sticky offers, even as days on market lengthened to 46 and months’ supply rose.

• Single-family median: $400,300 (+0.6% YoY). Condo/co-op median: $364,600 (+3.8% YoY). Faster condo appreciation may reflect relative affordability and investor interest even as volumes sag.

Price stickiness amid falling throughput is not a bullish signal—it’s a late-cycle tell. Prices move last; volumes move first.

Footnote Frictions: The Condo Header That Says “December”

Small errors matter. A section labeled “Condominiums and Co-ops in December” inside a January report won’t move the bond market, but it dents confidence. When the narrative already leans hard on selective framing (January record vs November level), sloppy headers invite investors to double-check the rest.

What This Means for Markets

• Equities: Existing-home brokers and ad-driven portals face a tougher Q1 setup as SAAR dips to 3.91M and DOM stretches to 46. Homebuilders remain relatively favored—rate buydowns and completed inventory keep them competitive versus resales. Watch builder incentives; if they deepen, margins will be the pressure point.

• REITs: Single-family rental REITs stay on strong footing. A resale market that’s less transactable, despite 6.10% mortgages, channels would-be buyers into rentals. Multifamily benefits less directly; condo price resilience (+3.8% YoY) suggests investor demand persists but is selective.

• Rates and MBS: The print is growth-cool, not disinflation-hot. Median prices still up 0.9% YoY and cash share at 27% limit the “housing is breaking” narrative. MBS spreads should remain sensitive to origination hopes that don’t materialize—supporting MSR-heavy balance sheets over pure volume plays.

• Banks and credit: Purchase originations won’t rebound meaningfully until we see either more price capitulation or sub-6% mortgage rates. Expect continued pressure on mortgage banking fee income and a slower revolving of HELOC demand as homeowners stay put.

• Macro lens: This report nudges in the direction of softer real activity without delivering price disinflation. It keeps the Fed patient: no urgency from housing to cut faster, but also no reason to fear an inflation re-acceleration via shelter.

Positioning and what to watch

• Favor quality homebuilders with strong incentive capacity and shorter cycle times; underweight transaction-dependent brokers and ad/lead generators until SAAR stabilizes above ~4.2–4.4M.

• Lean into SFR REITs on continued “rent vs buy” tilt while watching lease-rate growth and turnover.

• Prefer MSR exposure within mortgage credit; be cautious on originators until mortgage rates sustainably breach 6% with clear purchase-app follow-through.

• Monitor: MBA Purchase Apps, next NAR print on inventory and DOM, builder pricing incentives in earnings calls, and the 10-year yield/mortgage spread (if spreads narrow without rate relief, purchase demand remains capped).

The bottom line: Headlines cheered “most affordable since March 2022.” The market yawned. Sales fell 8.4%, months’ supply rose to 3.7, and days on market hit 46. Until prices reset or mortgages push decisively below 6%, housing’s path of least resistance is lower throughput, not higher prices. Position for volume stagnation with selective strength where incentives can do the heavy lifting.