Dive Brief:

• New home sales dropped 9.2% between December and January to an annual rate of 494,000, the Commerce Department reported Wednesday. 
• The median sales price of homes sold in January was $278,800, down from $288,900 in December.
• The dip in new home sales was led by a steep 32.1% decline in the West. Sales fell in the Midwest by 5.9%, inched up 1.8% in the South, and rose 3.4% in the Northeast.

Dive Insight:

New home sales, which represent about 10% of all home sales, failed to meet expectations in January, as economists surveyed by MarketWatch had predicted new, single-family home sales would only drop to 520,000.

The major decline in sales in the West was likely due to the region's lack of inventory and sharp rise in home prices, according to NBC.

Concerns regarding price gains have continued to grow in the residential industry, as analysts have warned the lack of affordable options for first-time buyers continues to push prices up, pricing many potential buyers out of the market.

Earlier this week, despite the positive January existing home sale results overall, NAR Chief Economist Lawrence Yun cautioned that lack of supply is still a major concern and is causing the steep rise in prices. "The housing market has shown promising resilience in recent months, but home prices are still rising too fast because of ongoing supply constraints," he said in a release. 

So far, housing market reports for this month have been disappointing. Homebuilder confidence slipped three points to a score of 58, and housing starts unexpectedly slipped 3.8% in January. On the bright side, however, existing home sales surpassed expectations and rose 0.4% last month.