Pending home sales declined from August to September, but retained yearly gains.

Though the Pending Home Sales Index declined in September,  activity remains above a year ago, according to data from the National Association of Realtors (NAR).

A forward-looking indicator that is based on contract signings, the index fell 4.6 percent to 84.5 in September, but is still 6.4 percent higher than September 2010 when it stood at 79.4.

Lawrence Yun, NAR chief economist, said in an NAR press release that a number of factors contributed to the decline, namely lagging confidence and tough lending practices.

“A combination of weak consumer confidence and continuing tight lending criteria held back home buyers, even though the private sector added nearly 2 million net new jobs in the past 12 months,” he said.

Data varied geographically. In the Midwest, which includes Chicago, the index dropped 6.2 percent to 71.5 in September, but remained 12.3 percent higher than September 2010’s index.

Yun also commented on the underlying financial questions that still surround housing.

“America’s monetary policy is contradictory and confusing, where some consumers with the best financial capacity and top-notch credit scores pay higher mortgage interest rates,” Yun said. “The Federal Reserve evidently has been attempting to lower mortgage rates, yet more consumers are faced with taking out jumbo loans that carry higher interest rates.”

“We need a comprehensive approach to address housing issues – not additional impediments,” Yun said.