The National Association of Realtors said Monday that its seasonally adjusted pending home sales index fell 5.6 percent last month from August to a reading of 101.6. The decline pushed the index below its year-ago level, the first time that's happened in nearly 2 ½ years.
There is generally a one- to two-month lag between a signed contract and a completed sale. The drop suggests final sales will decline in the coming months.
Mortgage rates reached a two-year high in August and remained elevated in September. But they have fallen in the past month, which could help boost contract signings in October. The average rate for a 30-year mortgage was 4.13 percent last week, according to mortgage buyer Freddie Mac.
Home prices, meanwhile, jumped 12.4 percent in August compared with a year earlier, according to real estate data provider CoreLogic. That's near the fastest pace in seven years.
Many economists still believe the housing recovery should continue, albeit with slower gains in home sales. They note that home prices and mortgage rates remain low by historical standards.
Last week, the Realtors' group said sales of existing homes fell 1.9 percent last month to a seasonally adjusted annual rate of 5.29 million in September. That's down from a pace of 5.39 million in August, which was revised lower. The sales pace in August equaled July's pace. Both were the highest in four years and are consistent with a healthy market.