WASHINGTON (AP) -- A measure of Americans who signed contracts to buy homes fell last month after reaching a 2 ½-year high in November. Sales were held back by a limited supply of available homes.
The National Association of Realtors said Monday that its seasonally adjusted index for pending home sales dropped 4.3 percent in December from November to 101.7. That's still 6.9 percent higher than a year ago.
The decline signals that sales of previously occupied homes may cool off in the coming months. There's generally a one- to two-month lag between a signed contract and a completed sale.
Still, the broader trend in home sales remains solid. Completed sales of previously occupied homes rose last year to their highest level in five years, one of many signs of recovery in the housing market last year. And the Realtors' group forecasts that sales will rise 9 percent this year, as the recovery strengthens. Other economists have similar forecasts.
"We believe the disappointment represents just a brief lull in what are volatile data rather than a fundamental change of direction," said Jim O'Sullivan, an economist at High Frequency Economics.
Stable job gains and record-low mortgage rates have encouraged more people to buy homes. And a tight supply of homes for sale has pushed up prices and made builders more confident to step up construction.
Completed sales of previously occupied homes dipped in December from November, primarily because the number homes available for sale fell to an 11-year low. And stable price gains could draw more sellers in the spring, when the traditional home-buying season begins.
More people are also moving out on their own after living with friends and relatives in the recession. That's driving a big gain in apartment construction and also pushing up rents.
Builders, meanwhile, started work on the most new homes in 4 ½ years in December. Last year was the best year for residential construction 2008, just after the recession started.
In December, the index of contracts signed fell in the Northeast, South and West. But it ticked up in the Midwest. The supply of homes costing less than $100,000 was particularly tight in the West, the Realtors said.