After hitting a two-year high, pending sales of previously occupied homes fell in August below the threshold considered healthy, according to a trade group.
An index of signed contracts had hit 101.9 in July, reaching its highest point since home buyers swarmed the market in April 2010 to take advantage of a government tax credit. But in August, the measure dipped 2.6% to 99.2, according to the National Assn. of Realtors.
A reading of 100 is considered historically healthy. Pending sales are considered a leading indicator for the housing market, usually coming a month or two before home sales are finalized.
Compared to the August 2011 reading of 89.6, though, last month's gauge was 10.7% higher.
The Realtors association's chief economist, Lawrence Yun, blamed the volatility in the market in part on a dearth of lower-priced homes nationwide and widespread inventory shortages across all prices in the West.
Only the Northeast saw a boost in signed contracts. The West suffered the deepest plunge – a 7.2% monthly drop to 102.5, or 4.2% lower than last August.
Still, Yun was optimistic. Existing home sales this year will rise 9% to 4.64 million before booming another 9% next year, he predicted.
Last week, the Realtors' association said that residential construction starts and existing home sales both increased.