While at a disappointing pace, new home sales increased in January, according to a joint release from the U.S. Census Bureau and the U.S. Department of Housing and Urban Development.

New residential single-family home sales increased 3.7% to an annually adjusted rate of 555,000 in January, the report stated. This is up from December’s rate of 535,000 and 5.5% above January 2016’s rate of 526,000.

One expert who previously served as Fannie Mae’s chief economist explained that this increase was lower than expected.

“Although new home sales rose in January, the 3.7% gain to 555,000 thousand units, seasonally adjusted, annualized pace, was disappointing,” Nationwide Chief Economist David Berson said. “We expected a larger gain for January given increases in the MBA’s purchase applications for the month, a surprisingly low sales pace for December, and warmer-than-usual temperatures.”

And other experts agreed there is room for growth in the new home sales market, which still sits at less than half of its pre-recession average.

“New homes are helping satisfy homebuyers constrained by low resale inventory, and the slow and steady uptick in sales reflects this,” Trulia Chief Economist Ralph McLaughlin said.

“That said, new sales have much room to grow,” McLaughlin said. “In January, new home sales represented about 11.6% of all sales, which is less than half of the pre-recession average of 23.6%.”

Median sales prices of new homes sold slipped in January from December’s $322,500 to $312,900 in January. The average sales price slipped from $384,000 to $360,900 in January.

Housing inventory dipped slightly in January to 265,000 new homes for sale. This is about a 5.7 months’ supply at the current sales rate, down from a 5.8 months’ supply in December.

“New home sales continued their years-long, slow and steady march upward in January, which is all well and good, but given the level of demand in the market, strong permits and starts activity and a bounce back from a particularly wintry and weak December, it’s fair to say this decent gain could have and should have been a bit more dramatic,” Zillow Chief Economist Svenja Gudell said.

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