WASHINGTON, (Reuters) – Due to record-low inventory in the United States, contracts for U.S. homes that were previously owned fell for the third consecutive month in January.

On Friday, the National Association of Realtors (NAR), reported that its Pending Home Sales Index, which is based upon signed contracts, fell to 109.5. While the West experienced a decline in home sales, they increased in the West.

Reuters polled economic experts to forecast that contracts would turn into sales in a matter of months. However, sales rebounded 1.0%. Year-on-year, the January decline in sales of homes pending was 9.5%.

Sales are being hampered by a severe shortage of homes that have been owned previously. The rising mortgage rate and high housing prices could cause a slowdown in demand. In turn, affordability will be further reduced, particularly for first-time home buyers. The mortgage rates have risen to three-year highs.

Lawrence Yun, chief economist at NAR, stated that buyers still have difficulty finding homes with a low inventory. It would be unsurprising to see housing demand decline given the current market situation, inventory and mortgage costs.