Existing Home Sales fell 0.7% from December to January to a 4 million unit annualized pace, per the National Association of Realtors (NAR), coming in a bit below expectations and marking the twelfth consecutive month of declines. Sales were also 36.9% lower than they were in January of last year. This is a critical report for taking the pulse of the housing market, as it measures closings on existing homes, which represent around 90% of the market.

What’s the bottom line? While it’s true that buyer activity was slower, multiple data points suggest that demand remains strong. Homes stayed on the market on average for 33 days, up from 26 days in December, but they are still moving fast. Plus, 54% of homes sold in January were on the market for less than 30 days. In addition, unsold inventory increased slightly from December to 980,000 homes available at the end of January, but it remains below normal with just a 2.9 months’ supply available at the current sales pace. However, inventory is even tighter than that figure implies. Of the 980,000 homes counted as unsold inventory, only 626,000 were “active listings” while 354,000 homes (or 36% of the total) were under contract and not truly available for purchase. This data also speaks to ongoing demand for homes, as a normal market has 25% of inventory under contract.