The sharp drop in January home sales was not due to a shortage of homes for sale. It was due to a shortage of affordable homes for sale.

While real estate economists continue to blame the pitiful 3.4-month supply of total listings (a six-month supply is considered a balanced market), a better indicator is a chart on the second-to-last page of the National Association of Realtors' monthly sales report. It breaks down sales by price point.

Sales of homes priced below $100,000 fell 13 percent in January year over year. Sales of homes priced between $100,000 and $250,000 dropped just more than 2 percent. The share of first-time buyers also declined to 29 percent, compared with 33 percent a year ago.

"Affordable inventory has been more depleted than expected and the upcoming spring homebuying season will likely be filled with bidding wars and multiple offers," said Joe Kirchner, senior economist at Realtor.com.

The biggest sales gains were in homes priced between $500,000 and $750,000, up nearly 12 percent annually. Apparently there are more of those homes for sale.

That's a problem, because higher price points are not where the bulk of buyers exist and especially not where most first-time buyers exist. If you look at sales distribution, about 55 percent of buyers are in the below $250,000 category. Just 13 percent are above $750,000.

Unfortunately, the entry-level price point is not where most new-home builders exist either today, given the significantly higher costs of construction. The median home price of a newly built home is around $335,000, according to the U.S. Census.

The lower-price tier is, however, where investors exist. During the recession, when the supply of homes for sale was about four times what it is today, investors bought millions of properties, saving the housing market overall by putting a floor on tumbling home prices. Realtors say now is the time for those same investors to sell.

"The price appreciation has been very good, but the future rent growth may not be as bright as what it had been, so if the investors begin to unload, there will be a welcoming trend for the housing market currently, as we need more inventory," said Lawrence Yun, chief economist at the National Association of Realtors.

But investors are still buying at a steady clip. They represented 17 percent of January home sales, unchanged from January of last year. They have put millions of dollars not just into home purchases but into renovations and management infrastructure. Occupancies are still high, and rents are not coming down. There is no compelling reason, save generosity to the rest of the market, for them to sell.

The January sales numbers also do not reflect the sharp jump in mortgage rates that began at the start of the year. That is because the numbers are based on closings during the month, which are from contracts signed in November and December, when rates were still low.

Higher mortgage rates erode affordability further. Not only do they make monthly payments higher, but for those on the margins of qualifying, higher rates may cut them out altogether.

"While rates are still low compared to historic norms, if the rate increases scared away some would-be buyers by denting affordability, that does not bode well for the rest of the year in which rates are only expected to go up," said Aaron Terrazas, senior economist at Zillow.

Higher mortgage rates also dissuade current homeowners from listing their homes for sale because they don't want to lose the rock-bottom rates they have. Moving to a larger home would mean paying a higher interest rate for the same debt. The market needs move-up buyers in order to add to the stock of affordable homes. Without sellers and without builders, a lot of first-time buyers are locked out.