Howe admits Newcastle are still navigating the Premier League's Profit & Sustainability rules, meaning a "marquee signing" is unlikely in the coming weeks.
He explained, "We have spent a lot of time talking about PSR and we are back at that time of year again. Marquee signing, I suppose you are talking big financial outlay. I don't think that is the desire this month.
"Any signing we make in this window will restrict our ability to do business in the summer so we need to make sure we make a smart decision. Our injury situation will define what we will do or won't do. If everyone is fit and available, we have a really balanced squad. If we lose players, particularly defensively, it leaves us in a different position."
Howe was also asked about rumours of young striker Will Osula pushing to leave Newcastle during this transfer window.
Osula has been linked with a move away over a lack of opportunities, but Howe said: There's no expectation from me that Will will leave. The only way we would consider that would be for his development and growth but always with a view to come back to us.
"He is injured at the moment so our priority is to get him back fit. We are hopeful he will back towards the end of the month. He has been frustrated because he was in a good place prior to his injury. As always there will be a decision taken on each player when the time comes."
Crystal Palace form
Moving onto facing Palace, Howe says there'll be no underestimating Oliver Glasner's team. Howe admits he's been impressed by the work of the Austrian.
"It will be a difficult game, their away form is very good," he said. "They're solid, tough to score against and it goes without saying how good a job I think Oliver has done.
"They've lost a few players but they are still a very good team and a team we can't underestimate and won't underestimate. We are boosted by the fact we are back at home but it is a game we need to prepare well for.
"Any home game for us is a positive. We've been really good at home for a long time. We prepare to play there and the more we can minimise travel in a hectic schedule will be good for us. January will be a season-defining month for us. The start to the month needs to be a fruitful one for us."
Newcastle sit 13th on the Premier League table, though as Howe highlights, they're just four points outside the top five.
"It's been a difficult season so far but the points gap is minimal if we can put a run together and that is a big if. If we can things can change quickly and this is the moment.
"We are running out of opportunities so our focus is there. I have isolated this as a season-defining month for us, and we have some exciting things to look forward to across all competitions."
Toon returnees
Howe says the Palace clash will come too soon for injured pair Sven Botman and Anthony Elanga, though they're now close to a return.
He said, "They're both very close. Sven's been training with the group which has been great so I envisage him being in and around this game. Anthony hasn't trained with us yet but is very close to doing so.
"(Emil) Krafth is further back, the others yes. We've got a couple of training days but Tino (Livramento) and Kieran (Trippier) have worked really well and they are both close. Lewy Miley was magnificent against Burnley and I have said time and again how well he has done for us but it will be a big boost to us to have a couple of full-backs back fit."
Meanwhile, on Lewis Hall - who was forced off during the win at Burnley - Howe says he should be fine for Sunday.
The manager added: "He should be OK. We'll have a closer look at him today but I don't see it being a big problem. Lew is technically excellent, an attacking, front foot defender and he is only going to get better the more football he plays."