Pending home sales were down month over month across the nation in February, with all four regions of the country declining, but the southern region of the country took the biggest hit, dropping 13%, according to the National Association of Realtors Pending Home Sales Index.

That monthly drop in the South put the region at 133.2 on the index; the baseline of 100 on contract activity was set in 2001, when NAR began the report. Year over year, pending home sales were up 2.9% in the South.

“The demand for a home purchase is widespread, multiple offers are prevalent, and days-on-market are swift, but contracts are not clicking due to record-low inventory,” NAR Chief Economist Lawrence Yun said in a press release. “Only the upper-end market is experiencing more activity because of reasonable supply. Demand, interestingly, does not yet appear to be impacted by recent modest rises in mortgage rates.”

Yun said he expects interest rates to go no higher than 3.5% for the remainder of the year, which will benefit both buyers and also sellers who are considering refinancing.

Homes above $250,000 have been the best sellers over the last several months, and the tight market may mean having to “enlarge their geographic search areas.”

“If there were a larger pool of inventory to select from – ideally a five- or a six-month supply – then more buyers would be able to purchase properties at an affordable price,” he added.