The Pending Home Sales Index dropped 4.7 percent in January after three months of increased activity. Based on contract signings, the forward-looking index fell from a downwardly revised 109.8 in December 2017 to 104.6 in January 2018.

The Pending Home Sales Index is down 3.8 percent from this time last year to its lowest level since October 2014. All major regions saw a decrease in contract signings last month, both monthly and annually.

National Association of Realtors chief economist Lawrence Yun says low inventory and increasing mortgage rates contributed to the decline in contract signings.

“The lower end of the market continues to feel the brunt of these supply and affordability impediments,” he said. “With the cost of buying a home getting more expensive and not enough inventory, some prospective buyers are either waiting until listings increase come spring or now having to delay their search entirely to save up for a larger down payment.”