The Pending Home Sales Index declined further in August to a seasonally adjusted reading of 108.5, the lowest level since this January, according to a Thursday release from the National Association of Realtors (NAR).

The reading was the third decline in four months, and is down 2.4% from a downwardly revised 111.2 in July. August's score also came in marginally lower than the performance a year earlier, when the reading was 108.7. The PHSI, based on signed real estate contracts for existing single-family homes, is a key tool to measure the housing contract activity and to predict existing home sales one or two months ahead.

The PHSI dipped in three of four regions. The West saw thee largest drop month-over-month (-5.3%) to a score of 102.8, while the South and Midwest experienced a -3.2% and -0.9% decrease, respectively. The only region to see pending home sales rise was the Northeast, up 1.3% from July to 98.1, but it remains the slowest market by sales volume.

“Contract activity slackened throughout the country in August except for in the Northeast, where higher inventory totals are giving home shoppers greater options and better success signing a contract,” said Lawrence Yun, NAR chief economist. "In most other areas, an increased number of prospective buyers appear to be either wavering at the steeper home prices pushed up by inventory shortages or disheartened by the competition for the miniscule number of affordable listings."

Yun warned that the data may point to a possible slowdown in the current housing recovery if more new homes are not built. Housing inventory has declined year-over-year for 15 straight months, while existing-home prices have been on the rise year-over-year for 54 consecutive months. Properties in August were sold 11 days quicker than witnessed in a year earlier, indicating a more intense competition over undersupplied homes.

“There will be an expected seasonal decline in new listings in coming months, which could accelerate price appreciation and make finding an affordable home even more of a struggle for would-be buyers," Yun continued.

The economist estimated that existing sales for this year would surpass last year's levels by 2.1% to a total 5.36 million, which would be the highest annual pace since the 6.48 million reported in 2006. The national median existing-home price growth is forecast this year to rise around 4%.

Read the full release from NAR or watch their video below for highlights of the July data.