The real reason home sales slowed in January. And it’s not what you think.

If you saw headlines that talked about how “Home sales fell sharply in January‘, it probably raised an eyebrow, especially if you’re considering selling your home. But the context is important.

Yes, home sales fell in January. But that has more to do with seasonality and weather than with a major drop in demand.

What is really behind the decline?

Reports come out National Association of Real Estate Agents (NAR) says the pace of home sales fell by roughly 8.4% last month compared to the month before. And that’s true. But it’s not necessarily cause for alarm.

Data shows that it is normal for sales to decline in January. Over the past four years, that pattern has held true for all but one year. And certainly, the decline we saw this year was a steeper decline than the norm (the yellow bars on the right), but that can also be explained. More about that later.

The really important part that you don’t get from the headlines is this: Normally, the pace of home sales picks up again in February, as the spring market gets underway. This is shown in the green bars below.

So although the market slowed down for a while, it should start to pick up again.

And in case you’re wondering, why the bigger drop this year, especially with mortgage rates lower than last year? Here’s your answer. If Realtor.com explains:

“Winter Storm Fern, which dumped snow and ice across much of the country, likely disrupted some closures, weighing the data and making it difficult to discern the housing market momentum trend from the weather noise.”

This According to the report, 40 states were affected by widespread winter weather in January National Weather Service. And in the real estate sector, that slows down momentum. This is why.

Data on existing home sales closed transactionsno new contracts. So when storms delay inspections, appraisals or final surveys, these deals often move to the next month instead of falling apart – especially when buyers and sellers are still trying to move forward.

Will house sales pick up again?

January’s missing sales are more likely “postponed” than “lost.” They haven’t disappeared. It just takes a little longer for them to close.

The rest of the data still points to a market heading into spring.

Affordability has improved for the 7^e month in a row, and buyers are regaining bargaining power in many markets across the country. So this one monthly report does not mean that buyers are not buying. It simply means, As the weather warms, activity should also increase.

In short

Don’t confuse a weather-affected month with a market that is losing strength. In any case, improving affordability is an indicator that there will be more activity, not less.

If you have any questions about what you hear online or in the news, contact a local real estate agent. Because the truth is, a little context can give you back your peace of mind.

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