Pending home sales slipped 1.4% from May to June, but they are still 9.5% above year ago levels, the National Association of Realtors said in its latest Pending Home Sales Index.
The pending home sales index hit 99.3 in June, down from a revised 100.7 index score in May.
NAR's pending home sales data reflects home sale contracts, not closings.
"Buyer interest remains strong but fewer home listings mean fewer contract signing opportunities," said Lawrence Yun, NAR's chief economist. "We've been seeing a steady decline in the level of housing inventory, which is most pronounced in the lower price ranges popular with first-time buyers and investors."
Yun said inventory remains a concern and there's a lack of balance between buyer traffic and seller interest. NAR's seller index hit 41 in June, while the buyer traffic index stood at 60. An index score of 50 generally signifies neutral market conditions.
"Any bank-owned properties that have been held back in markets with inventory shortages should be released expeditiously to help meet market demand," Yun said. "Housing starts will likely need to double over the next two years to satisfy the pent-up demand for both rentals and ownership."
The pending home sales index in the Northeast fell the most as it declined 7.6% from May to June. Still, it is 12.2% higher than year ago levels.
The Midwest index slipped 0.4% to an index score of 94.4 in June, while remaining 17.3% above year ago sales levels. Pending home sales in the South also fell 2%, hitting an index score of 106.2, which is still 8.8% above year ago sales levels. Pending sales in the West also grew 2.6% from May to June, hitting an index score of 111.5.