The association blamed the drop on frigid weather. In December, the index got a boost from unusually mild weather.

The Pending Home Sales Index, based on pending sales of existing homes, dropped from 119.3 in January 2006 to 108.7 in January 2007. A sale is listed as pending when the contract has been signed and the transaction has not closed, and pending sales typically are finalized within one to two months of signing.

An index of 100 is equal to the average level of contract activity during 2001, which was the first year to be examined and the first of five consecutive record years for existing-home sales, the association reported.