The National Association of Realtors said the index that tracks contracts of intention, called the Pending Home Sales Index, shifted lower by 0.4 percent to 105.2 in February, but managed to settle at the second highest rate in nearly three years.
In February, the index was 8.4 percent higher than February 2012, as the index posted its 22cnd consecutive months of improvements on an annual basis.
NAR said the market is recovering too fast for the current supply. "Only new home construction can genuinely help relieve the inventory shortage," NAR Chief Economist Lawrence Yun said in a statement.
"Most local home builders are small businesses and simply don't have access to capital on Wall Street. Clearer regulatory rules, applied to construction loans for smaller community banks and credit unions, could bring many small-sized builders back into the market," Yun said.
The Pending Home Sales Index for the Northeast fell 2.5 percent to 82.8, while the index in the Midwest rose 0.4 percent to 103.6. The index slipped 0.3 percent in the South to 118.8 and rose 0.1 percent in the West to 101.4, NAR said.
The index is a comparison to the monthly average for 2001, the first year the index was monitored, which was assigned a value of 100.