The National Association of Realtors said Wednesday that its index of sales agreements fell 4.6 percent last month to a reading of 84.5.

A reading of 100 is considered healthy. The last time the index reached that high was in April 2010, the final month that buyers could qualify for a federal tax credit that has since expired.

Contract signings are usually a reliable indicator of where the housing market is headed. There's typically a one- to two-month lag between a contract and a completed deal.

But the Realtors group said a growing number of buyers have canceled contracts after appraisals showed that the homes were worth less than the buyers had bid. A sale isn't final until a mortgage is closed. That means more pending sales aren't turning into final sales.

"It is especially troubling given the big August decline in long-term interest rates," said Pierre Ellis, an analyst at Decision Economics.

Homes are the most affordable they've been in decades. Long-term mortgage rates are hovering at record lows near 4 percent. Prices in some metro areas have been cut in half. Still, sales in most areas remain weak.

In part, that's because loans are harder to get. Many lenders are requiring 20 percent down payments and strong credit scores to qualify.

Sales for previously occupied homes are on pace to match last year's 4.91 million sold, the fewest since 1997. In a healthy economy, Americans would buy about 6 million homes each year.