Signed contracts to buy existing homes dropped 8.7 percent in December as abnormally cold weather hit much of the U.S., according to a new report from the National Association of Realtors.
The plunge caught economists by surprise. Economists polled by Reuters had forecast pending home sales would tick up 0.3 percent.
This pending home sales index fell to 92.4 from a downwardly revised 101.2 in November. These signed contracts are an indicator of sales in January and February, and are at the lowest level since October 2011.
"Home prices rising faster than income is also giving pause to some potential buyers, while at the same time a lack of inventory means insufficient choice. Although it could take several months for us to get a clearer read on market momentum, job growth and pent-up demand are positive factors," said the association's chief economist, Lawrence Yun.
All four major regions in the U.S. saw declines. Of these, the Northeast saw the steepest fall while the Midwest's drop was smallest in December from the month before.
Still, the NAR forecast that total existing-home sales should be close to 5.1 million this year, about the same as 2013, although inventory is limited in much of the U.S.
—By CNBC's Katie Little. Follow her on Twitter @KatieLittle