The nation's housing market, one of the stronger and more durable participants in the long economic recovery, took a step back during January, falling to the lowest level in a year and a half. For now, the problem seems to be largely weather related. The next few monthly reports, therefore, should be instructive.

All told, total existing home sales, which are completed transactions that include single-family residences, townhouses, condos, and cooperative apartments dropped 5.1% last month to an annualized rate of 4.62 million homes. That was down from the December total of 4.87 million homes and was a little below the consensus expectation for January of 4.69 million houses. The report was prepared by the National Association of Realtors (NAR), a large trade group of the housing industry.

Lawrence Yun, the NAR's chief economist, said this was a weather-related event, which has been blamed by most sector representatives over the past several weeks. And there seems to be a good deal of validity for that conclusion. All told, last month's activity was the slowest since July of 2012. He went on the suggest that the prolonged harsh winter is affecting large areas of the country and delaying economic activity, in general, with housing being no exception.

But he also opined that “we can't ignore the ongoing headwinds of tight credit, limited inventory, higher prices, and higher mortgage interest rates.” Mr. Yun concluded that these depressants will linger until job growth and new supply from higher housing starts begin to make an impact.

However, one thing that has not been held in check is home prices, which have increased by 10.7% over the past year. One reason for the improvement is that distressed sales, including foreclosures, which often are at lower price points, continue to fall as a percentage of the aggregate mix.  

Overall, this was a so-so report. On the one hand, the pullback was not as sharp as one might expect given the woeful weather affecting large swaths of the country. Conversely, existing home sales, as they do not involve either the construction of such residences, as do housing starts, or the completion of homes already largely built, as can new home sales, the impact from the weather should be more modest. So, we may be looking at some underlying sluggishness than could last for some time yet, even after the weather improves.

At the time of this article's writing, the author did not have positions in any of the companies mentioned.