The Pending Home Sales Index continued to decline in December 2005, reflecting the effect of higher mortgage interest rates in November, according to a recent report by the National Association of Realtors. Based on the number of transactions that have signed contracts but are not yet closed, the PHSI gauges home sales activity for upcoming months, as sales typically close within one or two months of contract signing. In December, the PHSI decreased 5.5% from the reading one year earlier, and fell 3% below November’s reading.