Pending home sales declined 3.7% to an index reading of 100.7 in December, after a revised 0.6% increase to 104.6 in November, according to a report released Thursday by the National Association of Realtors.
The November increase was first reported as 0.8% to 104.8.
Economists polled by Thomson Reuters predicted that the index would be up 0.5%
An index of 100 is equal to the average level of contract activity during 2001.
Year-over-year the pending homes sales index increased 6.1% from last December, when the index was 94.9.
Regionally, pending sales were lower. The Northeast saw a 7.5% drop to 82.1, while sales slid 2.8% in the Midwest to 97.1. In the South, sales fell 2.6% to 116.6, and sales decreased 4.6% to 94.0 in the West.
An uptick in prices and lower inventory led to the slip. "Total inventory fell in December for the first time in 16 months, resulting in fewer choices for buyers and a modest uptick in price growth in markets throughout the country," NAR Chief Economist Lawrence Yun said. "With interest rates at lows not seen since early 2013, the strength in existing-sales in upcoming months will largely depend on the willingness of current homeowners to realize their equity gains from the past couple years and trade up."
A pick-up is expected. "More jobs, increasing consumer confidence, less expensive mortgage insurance and new low down payment programs coming into the marketplace will likely lead to more demand from first-time buyers," adds Yun.
