By Anna Louie Sussman 

A forward-looking indicator of home sales slipped in June, but remained well above year-ago levels, a sign the housing market is stabilizing.

The National Association of Realtors said Wednesday its index of pending home sales fell by 1.8% to a seasonally-adjusted 110.3, the lowest level since March, but 8.2% higher than June 2014.

The index tracks contract signings, which usually close within two months.

The May index was revised down to 112.3 from a previously reported 112.6. May's value was still the highest since May 2006.

Economists surveyed by The Wall Street Journal had expected a 1% rise in June.

"I'm not discouraged by these numbers," said Selma Hepp, chief economist at real estate website Trulia, Inc. "The anticipation wasn't that there was going be a slowdown, but it's the same story we've been telling for a while now, that the lack of inventory is really constraining the market--the lack of inventory and the lack of affordability."

Stronger job gains have helped build momentum in the housing market this spring. Interest rates also remain at historical lows, despite ticking up in recent months.

The pace of completed existing-home sales increased 3.2% last month from May to a seasonally adjusted rate of 5.49 million, the strongest since February 2007, realtors said last week.

Realtors' chief economist Lawrence Yun said further release of pent-up demand would also depend on whether buyers would wait for more homes to come onto the market.

"The demand is there for more sales, but the determining factor will be whether or not some of these buyers decide to hold off even longer until supply improves and price growth slows," Mr. Yun said.

The seasonally adjusted homeownership rate declined to 63.5%, down from 64.7% in the second quarter of 2014, according to estimates published by the Commerce Department on Tuesday.

J.P. Morgan Chase analyst Daniel Silver said that the June pending home sales number, because it leads home sales by one or two months, means that slower days could be ahead.

"We will likely see some softening in the existing home sales data from their recent high over the next month or so following the June decline in pending sales," he wrote in a client note.

Pending home sales rose 0.4% in the Northeast and 0.5% in the West from May. They fell by 3% in the Midwest and South.

News Corp, owner of The Wall Street Journal, also owns Move Inc., which operates a website and mobile products for the National Association of Realtors.

Write to Anna Louie Sussman at anna.sussman@wsj.com