PENDING HOME SALES UNEXPECTEDLY DROP

However, the pace of sales remains above average, notes the National Association of Realtors.

"Activity is notably higher than earlier this year as prices have moderated and inventory levels have improved," said NAR's Lawrence Yun. "However, supply shortages still exist in parts of the country, wages are flat, and tight credit conditions are deterring a higher number of potential buyers from fully taking advantage of lower interest rates."

The pending home sales index fell 2.9% in the northeast, increased 1.1% in the midwest, declined 2.4% in the South, and ticked up 0.2% in the West.

Yun expects existing-home sales will be down 2.8% year-over-year in 2014.