Homebuyers signed 1 percent fewer contracts to buy existing homes in February compared with January, according to the National Association of Realtors' pending home sales index.

These contracts are a harbinger of closed sales one to two months later. Pending contracts were 4.9 percent lower tha a year earlier.

"In January, pending contracts were up close to 5 percent, so this month's 1 percent drop is not a significant concern," said Lawrence Yun, chief economist for the Realtors. "As a whole, these numbers indicate that a cyclical low in sales is in the past, but activity is not matching the frenzied pace of last spring."

Yun pointed to some sales growth in the West, although the region's current sales are well below the sales activity from 2018.

"There is a lack of inventory in the West and prices have risen too fast. Job creation in the West is solid, but there is still a desperate need for more home construction," he added.

The drop came despite buyers having the benefit of lower mortgage rates. The average rate on the 30-year fixed was just over 5 percent in November but began falling in December. They started January just above 4.6 percent but fell at the start of February to around 4.5 percent, according to Mortgage News Daily. Rates then sat there throughout the month, when these sales contracts would have been signed.

Closed sales of existing homes jumped nearly 12 percent month to month in February, also a reaction to the drop in mortgage rates at the end of the year. It may also have been simply due to more supply on the market and a cooling in home prices. Closed sales were still lower compared with a year ago.

Regionally, pending sales in the Northeast declined 0.8 percent month to month and were 2.6 percent below a year ago. In the Midwest, sales fell 7.2 percent monthly and 6.1 percent annually. Sales in the South were up 1.7 percent monthly and down 2.9 percent annually, and in the West sales increased 0.5 percent monthly and were 9.6 percent below a year ago.

The supply of homes for sale has been rising steadily, up just over 3 percent in February compared with a year ago. Home prices are still rising, but the gains have been shrinking each month for nearly a year.