The number of people signing contracts on existing homes continued to dwindle in January, the second month in a row to post a decline.

Pending homes sales fell 2.8% from December, bringing the National Association of Realtors' (NAR) Pending Home Sales Index to a reading of 88.9. (An index reading of 100 indicates contract activity is equal to the average level achieved in 2001, considered a historically healthy year by the association.) The month marked the lowest level since last October and sits 1.5% below year-ago levels, although the trade group was quick to point out that the reading remained 20.6% above the cyclical low set last June.

Lawrence Yun, chief economist at NAR, mitigated the news in a press release pointing to positive overall trends. “The housing market is healing with sales fluctuating at times, depending on the flow of distressed properties coming on the market,” Yun said. “While home buyers over the past two years have been exceptionally successful with historically low default rates, there is still an elevated level of shadow inventory of distressed homes from past lending mistakes that need to go through the system. We should not expect the recovery to be in a straight upward path—it will zig-zag at times.”

Regionally, numbers fell in the Northeast, Midwest, and West and rose in the South. The Northeast posted a 2.4% decline to 73.5 for the month, a 3.0% drop year-over-year. The Midwest saw a 7.3% decline to 78.0, 3.2% below January 2010. The West dropped 5.2% to reach 98.7, a level 0.9% below where it stood a year ago.

The South gained 1.4% to reach 97.7, remaining 0.4% below the previous year.

Claire Easley is senior editor, online, at Builder.

Learn more about markets featured in this article: Greenville, SC.