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The National Association of Realtors (NAR) this morning released its data on pending home sales in December. The index fell 4.3% from a downwardly revised 106.3 in November to 101.7, and it is 6.9% higher than in December 2011 when the index reading was 95.1. The consensus estimate called for a slight decrease of 0.3% 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 NAR’s chief economist noted:

The supply limitation appears to be the main factor holding back contract signings in the past month. Still, contract activity has risen for 20 straight months on a year-over-year basis. … We expect a seasonal rise of inventory in the spring to help, but a seller’s market may be developing. Much of the West is already a seller’s market for homes priced under a million dollars, but conditions are much more balanced in the Northeast.

Pending sales fell most in the West — down 8.2% compared with November. In the Midwest sales improved 0.9% from November, and sales in the South declined 4.5%. Pending sales in the Northeast fell 5.4% month-over-month, but remained 8.4% higher than a year ago.

The NAR noted that existing home sales rose 9% in 2012, and the group expects a similar rise in sales this year.