The National Association of Realtors (NAR) Monday morning released its data on pending sales of existing homes in August. The pending home sales index slipped 1% from an index reading of 105.8 in July to the August reading of 104.7. That is 2.2% lower than in August 2013, when the index reading was 107.1. The consensus estimate called for a month-over-month increase of 0.8% in pending sales.

The index reflects signed contracts, not sales closings. An index reading of 100 equals the average level of contract signings during 2001.

The index is at its second-highest level since August 2013, despite the pullback, and remains above 100 for the fourth consecutive month.

NAR estimates that total existing home sales in 2014 will be 3% below the 2013 total of 5.1 million at a total of 4.94 million. National median home prices are forecast to rise by about 5% to 6% this year and 4% to 5% in 2015.

The NAR’s chief economist noted:

Fewer distressed homes at bargain prices and the acknowledgement we’re entering a rising interest rate environment likely caused hesitation among investors last month. With investors pulling back, the market is shifting more towards traditional and first-time buyers who rely on mortgages to purchase a home.

Over the past two years, first-time buyers represent less than a third of all home buyers in every month. The NAR expects that percentage to rise as the employment outlook for young adults improves and their incomes rise.

Pending home sales in the Northeast United States decreased 3% in August, posting an index reading of 86.5, but up 1.6% from August 2013. The index fell 2.1% in the Midwest and is 7.6% below last year’s reading. Sales dropped 1.4% in the South, unchanged from a year ago, and rose by 2.6% in the West, but remains 2.6% below year-ago sales.

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