America’s housing market just delivered another gut punch.

Sales of previously owned homes plunged 8.4% in January — a far steeper drop than economists expected — even as mortgage rates eased and affordability showed signs of modest improvement.

The sudden slowdown is now prompting some economists to warn of what they’re calling “a new housing crisis.”

BIGGEST DROP IN 4 YEARS

Existing home sales fell to a seasonally adjusted annual rate of 3.91 million units, according to the National Association of Realtors.

That marks the biggest monthly decline in nearly four years and the slowest pace in more than two years. Sales were also down 4.4% compared with January last year.

The figure fell well short of expectations for a 4.1 million pace.

“The decrease in sales is disappointing,” Lawrence Yun, NAR’s chief economist, told CNBC. “The below-normal temperatures and above-normal precipitation this January make it harder than usual to assess the underlying driver of the decrease and determine if this month’s numbers are an aberration.”

But Yun’s tone has grown sharper in recent weeks. On a call with reporters, he described the market as facing “a new housing crisis,” adding bluntly: “The movement is not happening. Americans are stuck.”

Mortgage rates have been trending down for months. The average 30-year fixed rate briefly dipped to 6.06% in January — its lowest level since September 2022 — and is now hovering around 6.1%, roughly a full percentage point lower than a year ago.

Ordinarily, that kind of move would spark renewed demand. And technically, affordability has improved.

“Affordability conditions are improving, with NAR’s Housing Affordability Index showing that housing is the most affordable it’s been since March 2022,” Yun said.

“This is due to wage gains outpacing home price growth and mortgage rates being lower than a year ago. However, supply has not kept pace and remains quite low.”

Still, buyers aren’t rushing back.

MEDIAN HOME $396,800

The problem is that even slightly lower rates can’t offset years of soaring prices and chronically tight supply. The median home price in January hit $396,800 — up 0.9% from a year earlier and the highest January price on record. Home prices have now risen annually for 31 consecutive months.

Yun acknowledged the tension: potential buyers are “still struggling,” and “renters are not participating in housing wealth.”

At the end of January, there were 1.22 million homes on the market. That’s up 3.4% from a year ago, but still well below the roughly 2 million homes typically available before the pandemic.

At the current sales pace, that equals a 3.7-month supply. A balanced market between buyers and sellers usually requires a 5- to 6-month supply.

In other words, there’s more inventory — just not nearly enough.

Homes are also sitting longer. Properties spent an average of 46 days on the market in January, compared with 41 days a year earlier.

Lisa Sturtevant, chief economist at Bright MLS, believes conditions may slowly tilt toward buyers as spring approaches.

“Buyers will find a more favorable market as we head into spring,” she said. “More inventory, lower rates and slower price growth will give buyers more room for negotiation.”

Sales were weakest in the South and West on a monthly basis, though every region posted declines.

And the pain is not evenly distributed.

$1 MILLION HOUSES MOVE

The only segment showing annual growth was homes priced above $1 million. Sales fell most sharply for properties under $250,000 — the very homes first-time buyers need most.

First-time buyers accounted for 31% of sales in January, up slightly from 28% a year ago but still below the historical norm of 40%.

Meanwhile, higher-end buyers — often with equity from prior homes — continue to transact.

“Homeowners are in a financially comfortable position as a result,” Yun said. “Since January 2020, a typical homeowner would have accumulated $130,500 in housing wealth.”

That wealth gap underscores the growing divide between owners and renters. Those who already own property have benefited from record appreciation. Those trying to break in remain largely sidelined.