WASHINGTON, Feb 27 (Reuters) – Contracts to buy U.S. previously owned homes plunged to a record low in January as higher mortgage rates and house prices reduced affordability for prospective buyers.

The National Association of Realtors (NAR) said on Thursday its Pending Home Sales Index, based on signed contracts, dropped 4.6% last month to 70.6, an all-time low.

Economists polled by Reuters had forecast contracts, which become sales after a month or two, falling 1.3% in January. Pending home sales decreased 5.2% from a year earlier.