The NAR's Pending Home Sales Index showed that transactions declined 3.5 percent during December to a reading of 96.6. November's figure was 100.1. However, the index was 5.6 percent above December 2010's figure of 91.5.

"Even with a modest decline, the preceding two months of contract activity are the highest in the past four years outside of the homebuyer tax credit period," said Lawrence Yun, chief economist for NAR. "Contract failures remain an issue, reported by one-third of Realtors over the past few months, but home buyers are not giving up."

When looking at the regional picture, every region witnessed a month-over-month decline in the index except for the Midwest, which increased by 4 percent, the report added. The West witnessed the most significant drop during the month - a total decline of 11 percent.

With the sales down to end the year, it may not be a significant hit on the mortgage market, as the cold weather and holidays may have curbed consumer demand.

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