U.S. pending home sales slowed modestly in June, according to the National Association of Realtors (NAR).

NAR’s Pending Home Sales Index declined 1.1 percent to 102.7 in June from 103.8 in May, and is 7.3 percent below June 2013 (110.8). Despite June’s decrease, the index is above 100 – considered an average level of contract activity – for the second consecutive month after failing to reach the mark since November 2013 (100.7).

Lawrence Yun, NAR chief economist, says the housing market is stabilizing, but ongoing challenges are impeding full sales potential.

“Activity is notably higher than earlier this year as prices have moderated and inventory levels have improved,” Yun said in a statement. “However, supply shortages still exist in parts of the country, wages are flat, and tight credit conditions are deterring a higher number of potential buyers from fully taking advantage of lower interest rates.”

Despite these headwinds, Yun ultimately expects a slight uptick in sales during the second half of the year.

In the Northeast, pending home sales fell 2.9 percent to 83.8 in June, and are 3.2 percent below a year ago.

Yun forecasts existing-homes sales to be down 2.8 percent this year to 4.95 million, compared to 5.1 million sales of existing homes in 2013. The national median existing-home price is projected to grow between 5 and 6 percent this year and in 2015.