The index hit a six-year peak in May before entering a two-month slide. In July, the index dropped to 109.5 from June's level of 110.9.
The index remains 6.7 percent higher than July 2012, when it stood at 102.6.
Pending home sales, which reflects sales activities one and two months down the road, have risen on an annual basis for 27 consecutive months.
The index is a comparison to the monthly average for 2001, its first year, which was assigned a value of 100.
The NAR said the Pending Home Sales Index for the Northeast fell 6.5 percent to 81.5 in July, although it came in 3.3 percent higher than July 2012.
In the Midwest, the index, dropped 1 percent to 113.2, a level 14.5 percent higher than July 2012.
In July, the index rose 2.6 percent in the South to 121.5, which is 7.7 percent higher than 12 months prior. In the West, the index came to 108.6, down 4.9 percent from June and 0.4 percent below July 2012.
"The modest decline in sales is not yet concerning, and contract activity remains elevated, with the South and Midwest showing no measurable slowdown," said Lawrence Yun, NAR chief economist in a statement.
"However, higher mortgage interest rates and rising home prices are impacting monthly contract activity in the high-cost regions of the Northeast and the West," Yun said.
"More homes clearly need to be built in the West to relieve price pressure, or the region could soon face pronounced affordability problems," Yun said.