The numbers: The index of pending home sales dropped 0.3% in December, marking the fourth consecutive month of declines, the National Association of Realtors said Friday. The index measures real-estate transactions in which a contract is signed, but the sale had not yet closed.

Compared to 2019, pending sales were still up 21%, a sign of how strong the market is right now despite the recent weakness.

What happened: Pending sales didn’t fall across all regions, as was the case in November.

In fact, the Midwest was the only region to experience a decline, with a 3.6% drop. Pending sales were flat in the West and rose by 3.1% in the Northeast and 0.1% in the South.

The big picture: In the months to come, the story will be whether the number of listings of homes for sale will grow to meet demand.

“Pending home-sales contracts have dipped during recent months, but I would attribute that to having too few homes for sale,” said Lawrence Yun, the National Association of Realtors’ chief economist. “There is a high demand for housing and a great number of would-be buyers, and therefore sales should rise with more new listings.”

It’s not clear precisely what has held sellers back from putting their homes on the market. But the problem could be a self-perpetuating one: Some buyers might be seeing the dearth of homes for sale and be reluctant to list their own for fear of not finding somewhere to move to.

What they’re saying: “Demand for existing homes remains strong but supply is likely restraining sales figures,” said Ruben Gonzalez, chief economist at Keller Williams. “We expect to see continued price acceleration in the near term as a result of record-low inventory levels that have persisted for several months now.”

Market reaction: The Dow Jones Industrial Average and S&P 500 both fell in Friday morning trades.

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