Signs of a cooling real estate market continued to emerge in January, according to figures from the Realtor Association of the Pioneer Valley that show home sales dropped by 32.5% across the three counties compared to January 2022 statistics.

The figures continued a trend from December, when The Warren Group reported single-family home sales across Massachusetts declined by 31.7% from sales during December 2021.

“The Massachusetts single-family market finally hit that wall we’ve all been anticipating,” stated Tim Warren, CEO of The Warren Group.

Sales volume was down last month across Hampshire, Hampden and Franklin counties, Realtor Association of the Pioneer Valley data shows. Sales were down 12.2% in Franklin County and as much as 49.4% in Hampshire County, compared to January 2022. In Franklin County, the median price dropped 22.8%, although the median price rose by 7.3% in Hampshire County and 6.8% in Hampden County.

“The volume [of sales] has definitely decreased,” said Barbara Jean Deloria, senior vice president and credit risk manager at Florence Bank.

Less than a year ago, the Federal Reserve began raising its key interest rate in an effort to tamp down inflation, and rising interest rates have clearly had an effect, Deloria said. Compared to a year ago, when Florence Bank offered mortgages at 3.625%, the rate for a first-time home buyer now is 5.75%.

Additionally, there are fewer homes for sale — and that has maintained upward pressure on prices.

In fact, while single-family home and condominium prices across Massachusetts continued to set records in January, sales activity plummeted by double digits, with the fewest single-family homes sold in January since 2011, according to The Warren Group.

A continuing supply shortage is mostly to blame, said Cassidy Norton, associate publisher and media relations director for The Warren Group.

“There’s not enough housing,” she said.

Norton noted that rising interest rates not only discourage buyers, but they can also make potential sellers pull back, especially if they’re currently benefiting from the low rates of the last 10 years, because a new mortgage will cost considerably more.

Norton said she expects prices to keep rising while sales numbers continue their downward trend in the coming months.

“Massachusetts is an expensive place to live,” she said. “I don’t see anything changing that.”

Some see signs, though, that prices are leveling off.

“We’re starting to see that market correction,” said Lori Beth Chase, president of the Realtor Association of the Pioneer Valley.

Chase said she sees home buyers, confronted with more expensive borrowing, taking more time to consider their purchases. Properties on average are spending longer on the market.

Realtor Julie Held, co-owner of Maple and Main Realty in Northampton, said she has clients who are still looking to close on a home after more than two years of trying.

“They keep getting outbid,” she said.

Also playing into the competition are contingencies — prospective buyers who need to sell their current home before they can close on a new one. That can cause sellers to pass them over, Held said.

Some of January’s statistics, such as the 22.8% drop in median sale prices compared to the same month last year in Franklin County, can be seen not only as a result of a relatively small sample size — 36 closed sales — but as part of this process, Chase said.

“Last year was insane,” she said. “We saw a dramatic price increase in Franklin County, and this drop is a correction.”

Chase said she doesn’t expect home prices will drop, but she predicts that they will continue to stabilize.

Market analysts compare monthly sales activity to the same month in the previous year because the market is cyclical, Norton noted. There tends to be an uptick in sales in spring and summer, and a corresponding drop-off in winter.

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