The Pending Home Sales Index declined 4.3% in December to a reading of 101.7, according to data released Monday morning by the National Association of Realtors.
The data, which reflects contracts but not closings, was up 6.9% compared with the year-ago month.
“The supply limitation appears to be the main factor holding back contract signings in the past month,” said Lawrence Yun, NAR chief economist. “Still, contract activity has risen for 20 straight months on a year-over-year basis. Buyer interest remains solid, as evidenced by a separate Realtor survey, which shows that buyer foot traffic is easily outpacing seller traffic."
Even with tighter inventory, a pent-up demand and favorable affordability conditions bode well for the market, according to the NAR. Yun expects existing-home sales to increase another 9% in 2013, following a 9% rise in 2012.