Traffic might have improved for new-home builders in January, but sales of existing homes dipped lower than expected last month, according to data released today by the National Association of Realtors.

It reported that existing-home sales activity slid 5.3% on a monthly basis to 4.49 million units in January, which represents an 8.6% year-over-year decline.

Negotiations in Congress over the amount and other details of a housing tax credit may have been a factor. The Senate had approved a $15,000 tax credit for all home buyers, but that was ratcheted back to an $8,000 credit for only first-time buyers in the final legislation. “Given so much stimulus package discussion in January, some would-be buyers simply sat out for clarity and certainty on the nature of housing stimulus,” suggested Lawrence Yun, NAR’s chief economist.

Still, the staggering amount of existing homes for sale did fall in January, decreasing 2.7% to an inventory of 3.6 million homes. It would take 9.6 months to sell all those homes at the current sales level for existing homes. “The drop in total inventory is an encouraging sign because the number of homes on the market has declined steadily since peaking in July 2008, and inventory is at the lowest level in two years,” Yun noted.

Unfortunately for sellers and builders alike, though, sales prices are continuing to decline, thanks to foreclosure sales and a preference for smaller, more affordable homes in a difficult economy. According to the NAR, the national median price for an existing home in January was $170,300, which represents a reduction of 14.8% compared to the same time one year ago. 

Alison Rice is senior editor, online, at BUILDER magazine.