A leading indicator of the health of the housing market is showing signs that the hot housing market may be cooling off.

The National Association of Realtors’ (NAR) Pending Home Sales Index, which tracks the number of homes that are under contract to be sold, fell 4.4% in April from the previous month. The results are a huge disappointment, with analysts expecting a 0.4% increase, according to Bloomberg consensus estimates. And it reverses a pending home sales rebound in March. The NAR attributed the decline to record-low inventory of homes for sale in the first three months of 2021.

Sales activity declined in all of the four U.S. regions except one — the Midwest. Contract signings, however, were up 51.7% from a year ago, when pending home sales hit an all-time low and the COVID-19 pandemic basically ground the housing market to a halt.

“Contract signings are approaching pre-pandemic levels after the big surge due to the lack of sufficient supply of affordable homes,” said Lawrence Yun, NAR’s chief economist, in a press statement. Pending home sales indicate when buyers sign a contract to buy a home and are reflective of future sales which take place a few months later.

Housing prices continue to surge at a record pace this year. On Tuesday, Standard & Poor’s said Tuesday that its S&P CoreLogic Case-Shiller national home price index posted a 13.2% annual gain in March, up from 12% in February — marking the fastest growth rate in more than 15 years.

Last week, the NAR reported that median existing-home prices rose to a record $341,600 in April, up 19.1% from the same month a year ago.

“Today’s data shows that buyers are contending with a ferociously competitive housing market,” said Realtor.com Chief Economist Danielle Hale in a press statement prior to the results. “Home sellers know that they have the upper hand and are using it to ask for high prices expecting that buyers will meet their demands.”

Industry experts note that there may be relief in sight, at least when it comes to the inventory shortage. Total housing inventory at the end of April was 1.16 million units, down 20.5% from one year ago — the lowest level since NAR started tracking homes for sale in 2011. But the good news is inventory is up 10.5% from March, an indication that homebuilding is picking up.

“The shortage crisis has led to home prices to increase at the fastest pace in over 15 years,” said BofA Securities in a recent research note. "Although demand for housing still remains strong, we expect these factors to put a slower growth in sales.”