WASHINGTON — Contracts to purchase previously owned U.S. homes decreased in March to a two-year low as buyers were deterred by rising mortgage rates and selling prices that remain higher than a year ago.

The index of signed purchase agreements, or pending home resales, fell 1.2 percent to 116.2, the lowest reading since February 2004, the National Association of Realtors said today in Washington. That follows a revised reading of 117.6 in February.

After five record years for housing, declining sales and slower appreciation in home values may hold back consumer spending and growth in the second half of the year, economists said. Federal Reserve chairman Ben Bernanke said last week that the housing market "will most likely experience a gradual cooling."

"Pending home sales are falling faster than some of the other housing indicators, but if you look at the whole mix, this has to be the best-case scenario for the Fed," said Michael Englund, chief economist at ActionEconomics LLC in Boulder, Colo. "They're getting the soft landing they wanted."

The average rate on a 30-year fixed mortgage was 6.32 percent in March, up from 6.25 percent a month earlier, according to Freddie Mac, the No. 2 buyer of mortgages. Last week, the average rate increased to 6.58 percent, the highest in almost four years.

"Pending sales data is showing a dampening effect from rising mortgage interest rates that have been trending up since January," said David Lereah, chief economist of the Realtors group. "This means a modest slowing can be expected in the sales pace in the months ahead, although the market will hold at historically strong levels."

Home resales will drop 6 percent this year, the Realtors group predicted on April 11.

The index of pending homes sales was forecast to fall 0.5 percent, the median prediction in a Bloomberg News survey of 13 economists, from an originally reported 117.7. Estimates ranged from a gain of 0.5 percent to a decline of 2 percent.

The gauge averaged 124 last year. Its base value of 100 represents average monthly pending sales in 2001.

The pending resales index decreased in two of four regions in March. Resales fell 7.4 percent in the Midwest and 1.2 percent in the South in March. Contract signings rose 5.2 percent in the Northeast and 0.7 percent in the West.

The Realtors group's data on pending home sales goes back to January 2001. The organization started publishing the data in March of last year to provide a leading indicator for resales. The gauge tracks contract signings, as does the Commerce Department's new home sales measure.

The older index of existing home sales measures contract closings, which reflect sales activity initiated one or two months earlier. Resales account for about 85 percent of the residential real estate market.