The pending sales of homes in the United States continued to fall on an annual basis in October, according to the National Association of Realtors. The Northeast was the only region to see some increase from the previous month.

The Pending Home Sales Index for October stood at 102.1, down 2.6 percent from September and 6.7 percent from October 2017. The index dropped from the previous year for the 10th month in a row.

The index measures transactions where a contract has been signed but the sale has not yet closed, an action which typically takes place within two months. An index of 100 is equal to contract activity in 2001, which had an existing home sales volume of between 5 million and 5.5 million – a rate considered normal for the current U.S. population.

Lawrence Yun, chief economist at the National Association of Realtors, blamed the slump in pending sales on the recent increase in mortgage rates, which have kept more potential buyers out of the market. He said a similar phenomenon occurred during the "Taper Tantrum," where an increase in the average mortgage rate from 3.5 percent to 4.5 percent depressed sales for 11 months from November 2013 to September 2014 until rates fell again.

"But this time, interest rates are not going down; in fact, they are probably going to increase even further," said Yun.

According to Freddie Mac, the average rate for a conventional 30-year fixed rate mortgage stood at 4.81 percent at the end of November. This was up from 3.9 percent at the end of November 2017.

The current level of home sales matches that of the year 2000. Yun said he was uncertain how the housing market will look in the near future, but said he is optimistic about its long-term outlook.

"Mortgage rates are much lower today compared to earlier in this century, when mortgage rates averaged 8 percent," said Yun. "Additionally, there are more jobs today than there were two decades ago. So, while the long-term prospects look solid, we just have to get through this short-term period of uncertainty."

Yun urged the Federal Reserve to ease up on future interest rate hikes, saying the inflationary pressure on the economy has ebbed due to a drop in oil and gas prices. The Fed has raised rates three times in 2018 and is planning a fourth hike in December. However, officials recently expressed more caution about how frequently to raise rates in 2019.

"Looking at the broader economy and keeping in mind that the housing sector is a great contributor to the economy, it would be wise for the Federal Reserve to slow the raising of rates to see how inflation develops," said Yun.

Updating his predictions on the year's existing home sales, Yun said he expects sales to reach 5.34 million in 2018 – a 3.1 percent decrease from 2017. He also believes that median home prices for the year will grow by 4.7 percent. In 2019, Yun forecasts that existing home sales will inch down 0.4 percent while median home prices will continue to grow at the slower pace of 2.5 percent.

In the Northeast, the Pending Home Sales Index stood at 92.9 in October. This marked an increase of 0.7 percent from September, but was down 2.9 percent from October 2017.

The West had the sharpest drop in pending sales, with the region's index plunging 8.9 percent from the previous month and 15.3 percent from the previous year to stand at 84.8. However, several markets in this region also saw the strongest increase in available listings, a reversal from an inventory crunch which helped fuel competition and price increases.

"The West region experienced the fastest run-up in home prices in a short time and therefore has essentially priced out many consumers," said Yun.

In the Midwest, the Pending Home Sales Index fell 1.8 percent from September and 4.9 percent from October 2017 to 100.4. The index in the South dropped to 118.9, down 1.1 percent from the previous month and 4.6 percent from the previous year.