“Connecticut spent most of 2007 defying the downward trends in neighboring states, at least when it came to prices,” said Timothy Warren, Jr, CEO of The Warren Group. “But 2008 is starting out on a different foot, and there’s probably more to come.”

Sales of single-family homes fell 28.6 percent from 2,302 in January 2007 to 1,644 in January 2008. The last time sales dropped by such a large percentage during a single month was in July 1989, when sales fell nearly 40 percent when compared to sales in July 1988. Single-family home sales have been declining steadily in the Nutmeg State since September 2007.

The median price of single-family homes dropped 5.3 percent from $282,000 to $267,000 in January, the largest decline in price since April 1995, when the median price fell 7.9 percent. The median price increased during most months of 2007, falling only during September by less than one percent, and in December by about two percent.

“After a year of median prices that continued to creep up despite sales that were declining, Connecticut’s housing market in January fell more in line with those in neighboring states,” Mr Warren said. “The median price of single-family homes in Massachusetts fell by more than four percent, and Rhode Island’s price dropped by almost 13 percent. Sales in those two states were also down more than 20 percent in January.

“The drop in median price in nearly every county — with the largest drop of 11.8 percent occurring in Fairfield County — indicates the housing slump is gripping even the wealthiest parts of the state. Buyers are waiting on the sidelines as news of plummeting home prices dominates the media, and it might be several more months before they decide to buy. Spring might bring increased interest in home buying, as it usually does, but it remains to be seen when New England’s housing market will snap out of this slump.”

Condominium sales in the state fared worse than single-family home sales, falling 36.1 percent in January, from 917 to 586. The median price of condos, however, stayed steady at $190,000 in both January 2007 and January 2008.

The Warren Group has recently revised its method of calculating statistics, and now excludes non-arm’s-length sales, or sales that occur between family members and sales that are substantially below the assessed value of a home. Also excluded are foreclosure deeds.