The National Association of Realtors said its seasonally adjusted index of pending sales for existing homes fell to a reading of 85.9 from a downwardly revised November index of 87.2. The reading was just short of the record low of 85.5 it hit in August, at the peak of the worldwide credit squeeze.

Analysts had predicted the index would rise to a reading of 88, according to the consensus forecast of Wall Street economists surveyed by Thomson/IFR.

Typically there is a one to two-month lag between when a buyer signs a home sales contract and the closing of the deal. Sales completed last month and into this month should be reflected in the December reading.

An index reading of 100 is equal to the average level of sales activity in 2001, when the index started.
The Realtors group also lowered its forecast for U.S. existing home sales this year. It now projects sales will fall to 5.4 million, down from 5.7 million in 2007.

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