In this Jan. 18, 2012 photo, a real estate sign is displayed in front of a home in Little Rock, Ark. (Danny Johnston/Associated Press)

Pending home sales fell 3.5 percent in December after reaching a 19-month high, according to a report released Wednesday by the National Association of Realtors.

The Pending Home Sales index is a leading indicator that is based on contract signings, not closed sales of homes. The index fell to 96.6 in December from 100.1 in November. The December 2011 figure reflects a 5.6 percent increase from the same period a year ago.

“Even with a modest decline, the preceding two months of contract activity are the highest in the past four years outside of the home buyer tax credit period,” said the realtors association’s chief economist Lawrence Yun. “Contract failures remain an issue, reported by one-third of realtors over the past few months, but home buyers are not giving up.”

Many real estate professionals have lamented the number of contracts that fall through because of problems with appraisals or financing. Banks and other institutions have imposed stricter standards for credit scores and down payments, for example.

The data comes after existing home sales have seen a slow but steady climb for the past three months beginning in October 2011, leading some economists to think the national market has finally hit bottom.

Although total volume of sales is expected to increase in 2012, home prices, however, are not expected to appreciate much.