A drop in contract signings in the Midwest and West dragged the January Pending Home Sales Index to its lowest point in a year, the National Association of Realtors said. In both regions, a shortage of available homes for sale was the main reason the PHSI fell 2.8 percent to 106.4, down from 109.5 in December.

However, January's reading is 0.4 percent higher year-over-year.

"The significant shortage of listings last month, along with deteriorating affordability as the result of higher home prices and mortgage rates, kept many would-be buyers at bay," said Lawrence Yun, chief economist for the NAR. "Buyer traffic is easily outpacing seller traffic in several metro areas and is why homes are selling at a much faster rate than a year ago. Most notably in the West, it's not uncommon to see a home come off the market within a month."

Contract signings increased in the Northeast (+2.3 percent) and in the South (+0.4 percent). But the Midwest fell 5.0 percent, and the West dropped 9.8 percent.

"Interest in buying a home is the highest it has been since the Great Recession," Yun said. "Households are feeling more confident about their financial situation, job growth is strong in most of the country and the stock market has seen record gains in recent months. While these factors bode favorably for increased sales in coming months, buyers are dealing with challenging supply shortages that continue to run up prices in many areas."