Fewer prospective buyers took the plunge on an existing home in August, according to the latest reading from the National Association of Realtors’ (NAR) Pending Home Sales Index, released today.

The forward-looking index, which tracks contract signings rather than closings, fell 2.6% to a reading of 99.2 for the month, following the two-year high seen in July when the index rose to 101.9. A level of 100 is considered healthy. Year-over-year, contract signings were up 10.7%.

"In the month-to-month numbers, you always have some volatility," said Lawrence Yun, NAR’s chief economist, in a video discussing the numbers today. "But the consistency has been that [activity] has been roughly 10% higher from one year before. And the latest month’s data is also showing that."

The slowdown in signings came from shrinking activity in what Yun calls "the hot markets," such as Phoenix, Las Vegas, and South Florida. But he pointed to growing prices and the shrinking number of average days on the market among listed properties, according to NAR surveys.

While Yun does not believe the recent double-digit annual appreciations in home prices are sustainable, expecting gains to slow to 5% annually, he remains bullish in his predictions for sales. "Assuming the economy continues to chug along," he said, "I anticipate home sales will be roughly 8% to 10% higher in 2012 once the December figures are all in, and another 8% to 10% higher in 2013."

See the National Association of Realtors’ full report on August’s pending home sales.

Claire Easley is a senior editor at Builder.

Learn more about markets featured in this article: Phoenix, AZ, Las Vegas, NV, Miami, FL.