• A 5.1 percent monthly decline in single-family home sales helped push overall existing home sales down in January from December, according to the National Association of Realtors.
• The median price of existing homes sold in January was $215,000, up from $213,000 in December and $202,000 a year ago.
• Given monthly and yearly declines in January sales volume, there is a more than 60 percent chance that 2015 will register overall lower sales for the year as a whole compared to last year.

Existing home sales fell by a more-than-expected 4.9 percent in January from December, according to the National Association of Realtors (NAR), to a seasonally adjusted annual rate (SAAR) of 4.82 million units. The drop was driven by a 5.1 percent month-over-month dip in single-family sales, and suggests a potentially down year for sales overall.

The decline was larger than most predicted, including Zillow (figure 1), and was the largest month-over-month decline since November 2013. On an annual basis, sales remain up 3.2 percent.

The median price of new homes sold in January continued to increase, reaching a seasonally-adjusted value of $215,000, up 1 percent from December and up 1 percent from a year ago. The median price of existing homes sold has increased in all but four months since the end of 2011 and is now at its highest level since August 2007.

Inclement weather wasn’t solely to blame, as sales volume fell across all major U.S. regions tracked by NAR and fell the most in the West (down 7.1 percent), which has enjoyed an unseasonably mild winter thus far and where weather has likely not had an adverse impact on transactions. Since closed sales often lag initial listing dates and open houses, it is possible that a more substantial weather effect could be visible in February data from listings that have only come on the market in the past few weeks.

Looking over the past 15 years, January tends to give a pretty good signal for the direction that existing home sales will take for the year.

Since 2000, in years when January sales declined on an annual basis, existing home sales fell for the year as a whole in four out of six cases (figure 2a). In years when January sales declined on a monthly basis, existing home sales fell for the full year in five out of eight cases (figure 2b). Looking at the correlation between the monthly and the annual change in January existing home sales, and the full-year change in existing home sales, suggests a better than 60 percent chance that 2015 will register overall lower sales.