Lower mortgage rates should have given home sales a boost in January, yet they did not. Sales of existing homes fell 1.2 percent to their lowest level in three years compared with December in addition to were a wider 8.5 percent lower annually, according to the National Association of Realtors.

of which could be not bad news for buyers seeking relative bargains inside the spring.

Real estate agents in addition to analysts have long been blaming weak sales on too few listings in addition to rising rates — yet supply has been rising steadily for several months in addition to rates have been falling. Total housing inventory at the end of January increased to 1.59 million, up via 1.53 million homes for sale in December. Supply will be also up via 1.52 million a year ago.

Home prices are still higher compared to a year ago. The median cost of an existing home sold in January was $247,500. yet of which will be just 2.8 percent higher compared with January 2018, the smallest annual gain since February 2012.

“Existing home sales in January were weak compared to historical norms; however, they are likely to have reached a cyclical low,” said Lawrence Yun, chief economist for the NAR. “Moderating home prices combined with gains in household income will boost housing affordability, bringing more buyers to the market inside the coming months.”

yet here’s the rub: The supply of affordable homes for sale will be not increasing quickly enough. of which will be why sales of homes priced below $100,000 were nearly 15 percent lower compared which has a year ago, while sales of homes priced above $750,000 were just 2 percent lower.

Homebuilders are still not ramping up production enough to meet demand, especially inside the entry-level market. Sales of newly built homes, which come at a cost premium to existing homes, were weak for much of last year.

Builders are starting to see more traffic through products, as they lower some prices in addition to offer more concessions. yet they are still finding the item hard to build cheaper homes.

“Rising costs stemming via excessive regulations, a dearth of buildable lots, a persistent labor shortage in addition to tariffs on lumber in addition to additional key building materials continue to make the item increasingly difficult to produce housing at affordable cost points,” said Robert Dietz, chief economist for the National Association of Home Builders.

Builder sentiment rose in February overall, as buyer traffic in addition to sales expectations for the next six months saw significant gains, according to the NAHB. Lower mortgage rates also helped sentiment.

After spiking in September, mortgage rates began falling in November in addition to fell even more sharply in December. They are right now at the lowest rate in a year.

Most analysts think the recent drop in mortgage interest rates will bring more buyers back to the market. yet home prices are still high, due to the sharp run-up after the recession.

of which has kept some first-time buyers sidelined. They represented just 29 percent of existing home sales in January, compared with 32 percent in December. Historically, first-time buyers represent about 40 percent of home sales.

“If mortgage rates stay close to these fresh lower levels, then the hit to affordability via rising rates will be reduced – in addition to the positive impacts of the job market in addition to demographics should flow through to stronger housing demand,” said David Berson, chief economist at Nationwide.

Lower mortgage rates, combined with slower home cost appreciation, are bringing the housing market out of its recent overheating in addition to into a more moderate environment with respect to the rest of the economy.

“Wages are growing on par with home prices for the very first time in years, in addition to with more inventory available, spring home sales should help the market begin to recover via the malaise of the last few months,” said Sam Khater, chief economist at Freddie Mac.