WASHINGTON, Sept. 29 (Xinhua) -- U.S. pending home sales slowed modestly in August, but contract signings remain at their second-highest level over the past year, a leading U.S.industry group reported on Monday.

The National Association of Realtors (NAR) said its index of pending home sales, which measures the number of contracts that have been signed but not yet closed for purchasing previously-owned homes, fell to 104.7 in August from 105.8 in July.

Lawrence Yun, NAR chief economist, said steady and fewer distressed sales and less investor activity is likely behind August's modest decline.

"Fewer distressed homes at bargain prices and the acknowledgement we are entering a rising interest rate environment likely caused hesitation among investors last month," he said. "With investors pulling back, the market is shifting more towards traditional and first-time buyers who rely on mortgages to purchase a home".

The NAR index is a forward-looking indicator of previously-owned home sales, since there is usually one or two months' lag between signing a contract and closing a deal. A reading of 100 indicates an average level of sales activity.