The Pending Home Sales Index, a forward-looking indicator based on contract signings, slipped 0.4% to 104.8 in February from a downwardly revised 105.2 in January. The index is 8.4% higher than February 2012 when it was 96.6.
The metric remained, however, at the second highest level in nearly three years; and contract activity has been above year-ago levels for the past 22 months.
Before January, the last time the index showed a higher reading was in April 2010, shortly before the deadline for the home-buyer tax credit.
Buyers faced limied inventory in February, according to Lawrence Yun, NAR chief economist. "Only new-home construction can genuinely help relieve the inventory shortage, and housing starts need to rise at least 50% from current levels," he said. "Most local home builders are small businesses and simply don't have access to capital on Wall Street. Clearer regulatory rules, applied to construction loans for smaller community banks and credit unions, could bring many small-sized builders back into the market."
The national median existing-home price is forecast to rise nearly 7% this year, while mortgage interest rates should remain historically low.