Pending sales of homes in the U.S. dropped 7.1% in August as buyers delay purchases because of high mortgage rates.

The index that follows the number of contracts signed before a home sale is closed fell to 71.8 in August from 77.3 in July, the National Association of Realtors said in a statement. The index fell 19% from a year earlier. All four U.S. regions showed a drop in pending sales.

"Mortgage rates have been rising above 7% since August, which has diminished the pool of home buyers," Lawrence Yun, NAR chief economist, said in the statement. "Some would-be home buyers are taking a pause and readjusting their expectations about the location and type of home to better fit their budgets."

The national average 30-year fixed mortgage rate reached a 2023 high of 7.23% in August. As of Sept. 21, the average 30-year fixed mortgage rate stands at 7.19%, according to Freddie Mac. It's close to the highest level in two decades.

NAR's pending home sale index is a leading indicator of upcoming sales closings.

On Tuesday, the Commerce department said that sales of newly constructed homes in the U.S. fell to the lowest level since March.

Mortgage rates are affected by the Federal Reserve's fight against inflation. Policy makers maintained the benchmark rate unchanged in the range of 5.25% to 5.5% on Sept. 20. Fed officials have indicated that another hike may be necessary this year.