More homes were for sale in January in the United States than at any point in the last five years, according to a new analysis from Redfin. Demand for homes, meanwhile, is the lowest it’s been since then. 

For the housing market, 2025 is off to a slow start. “There’s a lot of pent-up demand out there, but buyers were certainly moving very cautiously in January,” said Lisa Sturtevant, chief economist at Bright MLS.

She said there are a couple of reasons for that.

“The most obvious is that mortgage rates have just remained much higher than maybe some prospective homebuyers were hoping,” she said.

Many of them were expecting mortgage rates to come down after the Federal Reserve cut interest rates last year. Instead, they ticked up.

“But I think the biggest is really people feeling a little bit uncertain about the overall economy,” she said. “There’s a lot of psychology and emotion that goes into homebuying, and we know that when consumer confidence falls, we also see the housing market soften.”

And consumer confidence has been falling.

“Right now, to put it simply, we’re going through a chaotic period of time,” said Gbenga Ajilore, chief economist of the Center on Budget and Policy Priorities.

Imagine you work for a federal agency and you’re suddenly wondering how long that’ll be true.

“You’re not going to buy a house if you’re worried about a job, if you don’t know where your next paycheck is going to come from. You can’t make big purchases thinking about long-term future when your short-term future looks very uncertain,” he said.

In addition to uncertainty, there are cost barriers. For a long time now, said Daryl Fairweather, chief economist at Redfin, “what people have been hoping for has been an improvement in affordability, and we haven’t seen that.”

If that improves — including if mortgage rates come down even half a point — she thinks buyers will come off the sidelines. Economic uncertainty and all.