Sales of new single-family homes slipped in January from the month before but are up compared to the same time a year earlier.

The U.S. Commerce Department reports a 0.2% decline to an annual rate of 481,000, down from December’s upwardly revised rate of 482,000, which was the highest since June 2008.

Compared to January 2014, the new figure is 5.3% higher.

The only region that saw an increase in new home sales in January from December was the South with a 2.2% gain. Sales fell 0.8% in the West, 19.2% in the Midwest and 51.6% in the Northeast, with the latter two most likely being affected by severe winter weather.

Compared to a year earlier all regions but the Northeast posted gains.

The report also showed the supply of new homes increased in January to its highest level since 2010, a hopeful sign in this sector of the economy that has remained sluggish since the economic recovery started.

“Coupled with a near 5% decline in existing sales, this morning's decline in new sales suggests the housing recovery remains muted,” said Sterne Agee Chief Economist Lindsey Piegza.

Also, she noted Tuesday’s monetary policy testimony before Congress by Federal Reserve Chair Janet Yellen revealed a dovish approach by the central bank.

“Of course, given the slew of disappointing economic news including back-to-back months of negative retail sales, a one-year low on the ISM, and four months of negative durable orders in the last five, not to mention increasing concerns regarding a further decline in inflation and a still-sluggish housing market, and it's hard to imagine why the Fed wouldn't sound dovish in their assessment of the economy, as well as hesitant in their ability and willingness to initiate liftoff [when it comes to interest rates,” Piegza said.

According to her, the home sales report further confirms the Fed's assessment of a "slow" recovery in the U.S. housing market and offers yet another reason holding off on an interest rate hike.