WASHINGTON, Feb 12 (Reuters) - U.S. existing home sales tumbled to the lowest level in more than two years in January as falling inventory raised house prices.

Home sales dropped 8.4% last month to a seasonally adjusted annual rate of ​3.91 million units, the lowest level since December 2023, ‌the National Association of Realtors said on Thursday. Economists polled by Reuters had forecast home resales declining to ⁠a rate of 4.18 million units.

Last month's sales likely reflected contracts that were ⁠signed in November and December, and would not have been ‌impacted by winter ‌storms that slammed large parts of the country in January. Home sales decreased 4.4% on a year-over-year basis.

"The ​decrease in sales is disappointing," Lawrence Yun, ‌the NAR's chief economist said. "Affordability conditions are improving ... due to wage gains outpacing home price growth and mortgage rates being lower than ​a year ago. However, supply has not ​kept pace ‌and remains quite low."

The NAR's housing affordability index increased to 116.5 in January, the highest since March 2022, from 111.6 in December.

Mortgage rates have ⁠declined as the Federal Housing Finance Agency, which oversees mortgage finance giants Fannie ⁠Mae and Freddie Mac, started buying bonds issued by the two companies, though progress has stalled. Mortgage rates track the benchmark 10-year Treasury yield, which has risen amid high inflationary pressures and worries over federal government debt.

The inventory of existing homes ⁠fell ‌0.8% to 1.22 million units. Supply was up 3.4% from a ‌year ago. At January's sales pace, it would take 3.7 months to exhaust ⁠the current inventory of existing homes, up from 3.5 months a year ago.

The median existing home price last month rose 0.9% from a year ago to $396,800, the highest for any January. The median days on the market for listed properties increased to 46 from 41 a year ago.

First-time buyers accounted for 31% of sales, up from 28% a year ago. Economists ​and realtors say a 40% share in this category is needed for a robust housing market. All-cash sales constituted 27% of transactions, down from 29% a year ago.

Distressed ​sales, including foreclosures, made up 2%

of ‌transactions, down from 3% a year ago.